HMRC has updated its estimates for the cost of pension tax relief. Rachel Reeves will have taken note ahead of her first Budget on 30 October. Source: HMRC It was pure coincidence, but two days after the Chancellor had revealed a £22 billion black hole in government finances for the current financial year, HMRC released its annual update of the cost of pension tax reliefs. The headline figure (for 2022/23) was £48.7bn, more than twice the size of that black hole. That huge m

August saw the first cut in UK interest rates since March 2020. Source: Bank of England On 1 August, the Bank of England cut its bank rate by 0.25% to 5.00%, the first cut made since the early days of the Covid-19 pandemic in March 2020. The Bank’s Monetary Policy Committee, which made the decision, voted 5–4 in favour of the reduction. That underlines the division of opinions – the Bank’s Governor, Andrew Bailey backed the cut, but its Chief Economist, Huw Pill, took the opp

August started with sharp gyrations on global stock markets. It was a good time to be on holiday. Source: Investing.com It was once suggested that a wise approach to investment in the stock market is to make your choice and then go away to a remote desert island with no communication links for at least three – or preferably five – years. This drastic prescription, which predates the internet era, was meant to stop the investor from watching markets day-to-day, worrying abou

‘Tick the Gift Aid’ box to boost your donation to charity and save some tax. The number of national and international calls on our goodwill to donate to causes has grown in the last few years. You are probably familiar with the ‘Tick the Gift Aid’ box, or a request to sign a declaration, when you donate to charity. As a rule, it makes sense for you and the charity to do so. This simple step could mean a £100 gift costs you only £40 (or £32.50 in Scotland). When donating with

Are student loans something to avoid? With the 2024/25 academic year on the horizon, student finance is again a hot topic for many parents. How hot differs slightly for the UK’s four nations as each has a subtly different way of funding students and, outside Scotland, their tuition fees. However, the broad principles are the same: 1. Loans carry ‘interest’, usually at a rate linked to RPI inflation in March of each year (4.3% for March 2024). The rate levied can vary based

Autumn won’t leave much time for the new government to settle before important pension policy decisions need to be made. When MPs return to work after the summer recess, many areas of policy will require attention. Some are inheritances from the last government, while others are of the current government’s own creation. The pensions arena provides good examples of both: The lifetime allowance In March 2023, Jeremy Hunt, predecessor of Chancellor of the Exchequer Rachel Reeves

New data from HMRC show growing numbers of income taxpayers paying above the basic rate. Source: HMRC The club that all members want to leave, the income tax playing club, is gathering ever more members who are paying every greater subscriptions. That, at least, is one way of looking at some updated statistics which HMRC published in the final week before the election. Curiously, the main parties ignored the data, reinforcing what the independent Institute for Fiscal Studies

The date of the next Budget has been announced, accompanied by the new Chancellor’s warning about government finances. Chancellor Rachel Reeves’ first announcement on entering 11 Downing Street was the commissioning of a ‘spending inheritance’ review from the Treasury. Her decision to do so was questioned by the opposition (Conservatives), among others, who argued that the state of public finances had been made clear in the report from the Office of Budget Responsibility (OBR

Do you dream of retiring much earlier than your peers? Many ideas which originated in the US have made their way across the Atlantic. The latest financial innovation to join index-tracking investments, budgeting apps and exchange traded funds is the FIRE movement – Financial Independence, Retire Early. If you are a millennial or a member of Gen Z (born between 1997 and 2012) and not enjoying your working life, then FIRE has an obvious appeal. At the most extreme are people in

Market responses to elections should be treated with caution. Source: Investing.com 2024 is a year of elections around the globe – in varying shades of democracy. On some counts, around 60 countries will vote, representing close to half of the world’s population. This includes eight of the world’s most populous nations – Bangladesh, Brazil, India, Indonesia, Mexico, Pakistan, Russia, and the United States. June saw European Parliament elections, followed rapidly by the surpri

Central banks around the world are beginning to cut interest rates with the European Central Bank leading the way. Source: US Federal Reserve, Bank of England, European Central Bank On 6 June 2024, the European Central Bank (ECB) became the first major central bank (the big three being the US, UK and European) to announce an interest rate cut in the current cycle. This marked the ECB’s first cut since September 2019, when its main rate was reduced to a negative rate of -0.5%.

With a majority of over 200 and a weight of expectations, what happens next for Sir Kier Starmer’s new Labour government? The importance of the first 100 days of a new government cannot be understated. Within that period the new incumbent has the greatest political capital to take bold actions, as well as the greatest opportunity to lay the blame for ‘inherited’ problems on its predecessor. Given the timing of the election, Labour’s first 100 days are a little complicated and

The National Audit Office (NAO) has published a report on HMRC customer service which isn’t a happy story. Source: HMRC historic data, Office for Budget Responsibility (OBR) estimates A common tactic for grabbing a headline, be it a politician or organisation, is to take a relatively modest number and then multiply it by the large population to whom it applies. The National Audit Office (NAO), the UK’s independent public spending watchdog, adopted this approach for a press re

A useful new web tool has emerged, a little late in the game, in a joint effort from two government departments. In early 2023, HMRC and the Department for Work and Pensions (DWP) found they were unable to cope with the volume generated by a 5 April cut-off date that had been set a decade previously. The deadline related to the option to pay backdated National Insurance contributions (NICs) to fill in gaps in contribution records going back to 2006/7, rather than the standard

As we count down to the general election in July, be wary of those manifesto promises not to raise tax rates. The Conservatives and the Labour party are going into the next election with the same key fiscal rule. This states that in five years’ time, total government debt (currently about £2,700 billion) should be falling as a percentage of gross domestic product (GDP), which is broadly how much the UK produces in a year. It is a rolling five-year target, which means the test

In mid-May 2024, the Dow Jones Index crossed the 40,000 threshold for the first time. Source: Investing.com You might have noted headlines in May that the Dow Jones Index of US shares had broken through the 40,000 mark for the first time. It may have sounded like a significant landmark, but for professional investors, it was little more than a passing curiosity. Their indifference reflects the fact that, despite its widespread media use, the Dow is not an index they follow. N

Gold (Au on the periodic table) is having its day in the sun, but for how long? Source: Investing.com Long before Bitcoin was even a twinkle in the eye of its alleged inventor, Satoshi Nakamoto, there was gold. If you did not trust rulers, institutions or paper money, gold was what you owned to protect your finances. Its value/weight ratio made it ideal as way of keeping your wealth nearby should you need to flee the kingdom at short notice. Today there are still a few who be

The fees for obtaining probate in England and Wales have increased. The fee charged to obtain probate in England and Wales has been increased from £273 to £300 (10%) and for confirmation in Scotland, which has a sliding scale by 2%. Northern Ireland revised its probate fees in November 2023. Whether the higher fees will make any difference to the level of service is a moot point. In England, the current guidance from HM Courts and Tribunals Service (HMCTS) is that no queries

National Savings provides a glimpse of the new bond promised in the Spring Budget. Jeremy Hunt’s Spring Budget had an emphasis on Britishness with talk of “the great British pub”, ‘the British ISA’ (now a UK ISA) and ‘Great British Nuclear’. Included on the list of Britishness was the promise of a new ‘British Savings Bond’ (BSB) from National Savings & Investments (NS&I) which would “make it easier for people to save for the long term”. You may wonder whether the Chancellor

With allowances frozen or cut, you may have underpaid tax for 2023/24. Your tax position may have changed for the last year without you really noticing. Consider the following: Tax Year 2021/22 2023/24 2024/25 Personal allowance £12,570 £12,570 £12,570 Dividend allowance £2,000 £1,000 £500 Personal savings allowance £1,000 max* £1,000 max* £1,000 max* Bank of England base rate Close to 0% Average 4.5% 5.25% May 2024 New State pension £9,339 £10,600 £11,502 *£1,000 for basic a