New government may reverse stamp duty break for first time buyers

In the budget by the former Chancellor of the Exchequer, Alistair Darling, earlier this year it was announced that there was to be a stamp duty break for first time buyers in the UK, and that first time buyers would be able to buy a property up to the value of £250,000 without having to pay any stamp duty.

The former Labour government was hoping to help more first time buyers onto the property ladder and to revive the housing market through this move. The increased stamp duty exemption threshold was twice the standard levels, which is £125,000, and was made available for first time buyers only.

However, it has emerged that the new coalition government is considering scrapping the extension on stamp duty exemption, which means that first time buyers could have this important tax break pulled out from under them just months after it was originally introduced.

The extension on stamp duty exemption was set to last for two years until 2012, but as part a range of cutbacks the new coalition government could end up getting rid of the stamp duty break. The Conservative party had previously supported increasing the stamp duty exemption threshold for first time buyers, and the Labour party was said to have pinched the idea from the Tories.

In fact, many thought that the Conservative party would make the increased exemption permanent if elected, but instead the government is considering scrapping the tax break altogether in a bid to save more money to clear the public deficit.

The recent budget stated: ‘As announced in the Coalition Agreement, the Government will review the stamp duty land tax relief for first time buyers taking into account its impact on affordability and value for money.’

Tags: Herald Sun, first time buyer, chancellor, move, stamp duty

Some Brits losing money on savings

British taxpayers earning less than 5.4 per cent on their savings are losing money in the current economic climate, a new report warns.

With the retail price index at 4.3 per cent, consumers who are making taxable savings need to earn 5.4 per cent interest at least if they are to break even, a new report from moneysupermarket.com states.

There are currently 487 savings and current accounts which offer less than 5.4 per cent, the report notes.

Kevin Mountford, head of savings at the price comparison site, urges the government to consider ending the tax on savings as it tries to control the cost of living.

“Savers, especially those paying the higher rate of tax, should make sure they take full advantage of their annual £3,600 Isa allowance if they want to inflation proof their finances,” he adds.

Earlier this month, Nationwide Building Society released the results of a survey into saving attitudes which showed that while three-quarters of British consumers feel saving is important, just half of people in the UK do save regularly.

Tags: Brits, inflation, report notes.kevin mountford, cent, price, tax, consumers feel saving, british taxpayers

Tighten your belts as household costs rise, says expert

Consumers are being told to be careful with their money and ‘tighten their belts’ because of the rising costs of many essential household items and bills.

Money education charity Credit Action has said people have grown accustomed to relatively low food and petrol prices but they will now have to adjust their budgets as these costs are increasing.

According to Capital Economics, food inflation is expected to remain at its current rate of six per cent for the next few months, while water and council tax bills are set to rise.

Gas bills are predicted to increase by around ten per cent and electricity by eight per cent in the second half of the year.

“For most families and people trying to manage their money and trying to budget carefully, that’s going to become much harder because there’s going to be far more cost associated with just the basic day to day living expenses,” said Chris Tapp, director of Credit Action.

Tags: rise, day, tax, belts, consumers, charity, Tighten

New Isa rules need to be publicised more

More should be done to publicise the changes to the rules surrounding individual savings accounts (Isas), one financial expert has claimed.

According to Moneyfacts, the introduction of changes to the rules in the new tax year from April 6th, which are anticipated to attract more customers to the product, need to be more widely publicised outside of the trade press.

Michelle Slade, spokesperson for Moneyfacts, said: “They probably should do something more to advise customers out there what is going on.”

“The fact that they can now put in an additional £600 and it’s tax free… Obviously that’s the first port of call for anybody who’s going to take out savings,” she added.

In the new tax year, beginning April 6th, the rules for Isas are changing. There will no longer be distinctions between mini- and maxi-Isas:

Now all Isas will have an overall limit of £7,200, of which £3,600 can be saved in cash (under present rules there is a £3,000 cash limit).

Tags: Rob Fisher, spokesperson, tax, ISA, introduction, press, product

Savers not taking full advantage of Isas

Up to one in three savers are not taking advantage of their tax-free allowance with their individual savings accounts, according to new research.

Findings from Marks and Spencers Money shows that by not saving the maximum of £3,000 in current and previous tax years, savers could have lost out on £35 per head in tax free interest.

The firm said that this means savers could have lost a potential £23 million per year.

Brendan Cook, chief executive of M&S Money, said: “With an estimated 2million new Cash Isas to be opened in the current tax year, savers could be losing out on a huge amount of tax free interest.”

He urged savers to “take more interest in their savings”, and make full use of their Isa allowance, especially when the allowance increases from April 6th.

Last week, Adrian Lowcock of Bestinvest said that one way to get good value on an Isa was to search for a broker who only took a low rate of commission.

Tags: value, April, Brendan Cook, ISAs, tax

Tax-payers face millions in fines this year

New research has revealed that taxpayers are expected to pay the tax-man £463 million in fines during 2008.

Findings from UnBiased.co.uk reveal that the fines will be generated by late returns, miscalculations and surcharges on unpaid tax.

It is though that £89 million will be paid out for forms returned past the January 31st deadline, £302 million in fines for mis-calculations made on tax forms and £72 million will be administered in surcharges for unpaid tax from previous years.

David Elms, chief executive of Unbiased.co.uk, said, “The rules on self-assessment forms remain unforgiving towards those who return their forms late or incorrectly, so now is the time to take action!”

He added that missing the deadline for returning the form would certainly result in a fine and urged consumers to return them on time and in order.

In 2006, it was estimated that 876,000 self-assessment forms were received after the January 31st deadline, which the majority incurred a penalty of £100 for.

Meanwhile, the Association of British Insurers has urged those who are self employed to take out life insurance as they are now “responsible for all their own benefits”.

Tags: self-assessment forms, self, IRS tax forms, tax, David Elms, Tax-payers face millions, fine, Form 4868

Consumers need “rainy day emergency cash”

All consumers should aim to save up to six months worth of salary in an Isa as a “‘rainy day’ emergency cash”, according to financial experts.

However, Harsgreave Lansdown said that for those who have already used their Isa’s maximum deposit allowance of £3,000 during this tax year “there aren’t really that many options” open to them other than premium bonds or building societies.

Ben Yearsley, investment manager with the asset management provider, said: “A lot of people do hold stocks and shares in their Isa, they like the excitement of holding individual shares. When you get big winners you can make big tax free gains in the Isa.”

As of April 2008 a series of changes are expected to be made to Isa. These changes include an increase in the annual subscription limit for cash Isas by 20 per cent, from £3,000 to £3,600.

The limit for stocks and shares Isas will also go up by 3 per cent, from £7,000 to £7,200.

Tags: individual savings account, management provider, tax free gains, consumers, rainy day emergency, day, tax, series

Festive spending not affected by disposable income

Consumers will still buy what they need to be able to celebrate Christmas properly, even if their disposable income does not facilitate such spending, an industry expert has said.

According to the British Retail Consortium (BRC), both consumer confidence and disposable income have fallen this year, meaning that people may both be and feel “less well off”.

Head of media at the BRC, Richard Dodd explained: “[This] is a result of interest rate rises and also other costs having risen sharply, as well as mortgages, including utility bills, fuel bills and tax bills.”

He added that despite people being less well off and having less to spend, people will still “have the presence of the food and drink they want for Christmas”. This means that retailers will not suffer dramatically even though it may not be a “spectacular” year.

Deloitte have released predictions for spending which, it says, will increase by seven per cent on last year’s figures, with average spending per capita estimated at £706 up from £662 last year.

Tags: food and drink, fuel bills, year, disposable income, fuel, cent

Stamp duty ‘puts off’ first time buyers

Bradford & Bingley says that stamp duty, a charge which many buyers must pay on top of the fee for their new home, is putting off first time buyers (FTBs).

Terming stamp duty a ’stealth tax’ and ‘wholly unfair’, the mortgage lender points out that 68 per cent of FTBs currently either have paid or will pay the duty.

Using the monthly figures from the Council of Mortgage Lenders also released today, Bradford & Bingley’s report highlighted the finding that 11 per cent of FTBs had to reduce their deposit in order to cover stamp duty.

Andy Wiggans, director of mortgages for Bradford & Bingley, said that the tax “is seriously hampering [FTBs'] ability to get a foothold on the property ladder.

“The average first time buyer now has to find over £1,000 to pay this tax, at a time when most are struggling to even fund a deposit.”

He also drew attention to the finding that 11 per cent of FTBs had their stamp duty paid for by their parents.

Tags: buyer, percentage, GBP, charge, parents, tax, ability

Isa investments hit highest level

The last tax year saw the highest number of subscriptions to Individual Savings Accounts (Isas).

Figures from the Tax Incentivised Savings Association (TISA) show that £33 billion was invested in Isas in the year 2006/07.

The total number of people now investing in Isas has reached 20 million, with £300 billion earning interest with tax breaks.

Tony Vine-Lott, director general of the TISA, said that the figures put paid to scare mongering about a lack of people saving.

“While there are headlines claiming the savings ratio is at its lowest ebb, we can see from official HMRC [HM Revenue & Customs] figures that Isas are booming.

“The 2006/07 tax year was a record – showing that tax incentivised savings remain hugely popular with millions of people.

“TISA will be looking to ensure the popularity of Isas remains high on the public policy agenda,” he added.

Isas can only be invested in ahead of the tax year beginning, so savers will have to wait until April next year to qualify for the next round.

Tags: Tony Vine-, vine, individual savings accounts, Lott, tax, director, round, savings

Savers could benefit from another interest rate rise

Over the past year the UK has seen interest rates rise three times, shooting up from 4.5% in August last year to 5.25% by January of this year.

And with experts predicting that another rise of at least 0.25% will be enforced in May, and possible a further rise in the summer, borrowers on variable interest rates are dreading dealing with their finances, as this means that repayments will go up yet again. However, for some savers the story is quite different.

According to information from Moneyfacts interest rates on fixed rate savings accounts have been climbing, and another interest rate rise could spell good news for savers. According to one expert from Moneyfacts a number of banks and building societies have been raising fixed rate interest rates by up to 0.55%. This has created stiff competition between those offering these savings accounts, and at present the Nottingham Building Society offers the highest rate at 6.2%.

According to Moneyfacts’ Rachel Thrussell: “While rates in excess of six percent are currently very competitive, instant access rates are not far short of this mark, making the reward for tying up your money relatively low. So while these rates will offer a great return and piece of mind, perhaps the market has not yet reached its peak and better rates may still be yet to come.”

In a related report from Sainsbury’s Bank, some experts were concerned that savers were being short-changed in terms on interest on their savings, with many account failing to keep up with inflation and interest rate rises. Consumers that are saving in a low interest account are urged to shop around and look for an account that offers a higher rate of interest, as this could really bump up the amount if interest earned each year.

Tom Smith
28th May 2007

More Information:

• Savings Accounts – Are They Worth It?
• Internet Bank Accounts – The Benefits and Drawbacks

Tags: savings, tax, earn, fixed, interest

Cost of running home increases

The average UK homeowner has to fork out around £11,035 each year just to maintain their property.

According to Sainsbury’s Bank Home Insurance, that is how much it costs to run a home in 2006.

It signals a big increase in costs when compared to the same figure for 2004/2005 which was £1,199 less – that is 12 per cent lower than today.

The biggest financial increases have been seen in utilities, with gas having risen in cost by 27 per cent, electricity by 19 per cent and water and sewage by 14 per cent.

Council tax is also on the rise, with the average homeowner in 2006 paying 14 per cent more than they were in 2004/2005, while mortgage costs have also increased by an average of 12 per cent.

“It’s becoming more expensive to run a home, which makes it all the more important for homeowners to shop around to make sure they are getting the very best deals available,” commented Robert O’May, home insurance manager at Sainsbury’s Bank.

“This is not only for their mortgages and utility supplies but also their home insurance.”

In response to the figures, Sainsbury’s Bank has produced a free guide for homeowners which aims to help them reduce their costs.

Tags: Business Finance, Nectar loyalty card, Council, home insurance, tax, mortgage costs, guide, running home

Stamp duty is “big financial barrier”

The tax man is expected to reap the rewards of Gordon Brown’s final Budget with an additional £1.4 billion expected to enter his coffers as a result of stamp duty alone.

It comes as the Chancellor failed to raise stamp duty thresholds despite the average house price soaring in recent years.

The higher thresholds have been in place since 1997 yet in that time the average house price has rocketed by 175 per cent.

It means that more and more people are now expected to pay the tax, with first-time buyers being hit hardest as they struggle to get a mortgage and take their first steps onto the property ladder.

Homebuyers are required to pay one per cent stamp duty on a property which costs up to £125,000, three per cent for a £250,000 property and four per cent for one valued at £500,000.

The problem is that an estimated 3.5 million homes in England and Wales are now valued at more than £250,000.

“Stamp duty should be indexed in line with house prices and inflation,” said the Council of Mortgage Lenders’ Christopher Dean. “It is a big financial barrier.”

The Treasury has admitted that two fifths of homebuyers in the country will now be required to pay stamp duty.

Tags: budget, 000, Herald Sun, tax, finance, Victoria, treasury, house

Isa limits grow but not enough

People who are looking to invest money in a cash Independent Savings Account (Isa) have been given a welcome boost in Gordon Brown’s 11th Budget.

The Chancellor of the Exchequer announced that investors can now save an additional £600 in an Isa and will be free from paying tax on that money.

When cash Isas were first introduced in 1999 the maximum tax-free savings amount was £3,000. This figure has never changed until now.

Despite the increase being well received by many, Mr Brown has been criticised for only raising the total Isa limit by £200 to £7,200.

Critics argue that while the £3,600 limit is in line with inflation, the £7,200 limit falls well short.

“While the increase in the cash Isa allowance is a welcome move, we believe more should be done to encourage long-term savings,” commented Mike Regnier, head of savings at Halifax.

“If the total ISA allowance had risen in line with inflation, savers would now be able to invest around £8,500 per year, free of tax.”

The increase on total Isa limits has been labelled “meagre” by the Association of British Insurers, which called for the government to continue increasing limits in the years to come.

Gordon Brown’s new Isa limits will come into effect from April 2008.

Tags: tax, money, total isa allowance, increase, inflation, total isa, long-term savings, stock

Brown’s budget 2007

Gordon Brown has delivered his 11th and, almost certainly, his final Budget as Chancellor of the Exchequer.

Mr Brown, widely expected to become prime minister when Tony Blair steps down later this year, gave an eventful speech in which he announced that the basic rate of income tax would be brought down from 22p to 20p.

Those of you looking to get a mortgage on an environmentally-friendly home will be delighted to hear that Mr Brown has completely removed stamp duty from carbon neutral properties up to a value of £500,000.

People interested in using an Isa to help them with their banking can now invest £3,600 in an account without paying tax on it.

The biggest announcement was to with income tax and is one that is likely to help millions of people as they struggle with debt from credit cards and loans.

Mr Brown has completely scrapped the 10p band of tax, reduced the basic rate band from 22p to 20p and raised the point at which 40 per cent income tax is paid to £43,000 from 2009.

The Budget was not received well by everyone of course, with Sir Menzies Campbell calling it “a budget of missed opportunities” that is “asking the poor to subsidise the rich”.

Tags: Brown, tax, Menzies Campbell, prime minister, stamp, Govan, mortgage

Credit card market lacks competition

There is a lack of competition in the debit and credit card market, meaning consumers are getting a bad deal.

That is according to a new report published by the European Commission (EC) and it backs claims previously made by the British Retail Consortium (BRC).

For some time now, the BRC has been arguing that there is a lack of competition and that fees charged for transactions are an unjustifiable tax.

The BRC has revealed that the fees we pay are fuelling excess bank profits and figures from the EC report show that credit card issuers are making profits of 40 per cent.

Calls are now coming for the Office of Fair Trading to recognise the findings of the EC report in its current case against Mastercard and Visa’s fee arrangements.

“This report is a welcome indication that the commission agrees with us that banks are abusing their position,” said Kevin Hawkins from the BRC.

“The report sends a clear signal to member states, including the UK, that consumers and retailers have been bearing the costs of that abuse.

“We’ve long argued that high charges are an unjustifiable tax on consumers leading to excessive profits for the banks,” he added.

Customers looking to get a credit card should shop around and try to find the best deal to suit their personal needs.

Tags: BRC, tax, Credit card, fee, MasterCard

Workers not insured for absence

A large number of Britons are losing big sums of money due to taking time off work for illness and injury.

Research from Standard Life shows that the average worker has lost £5,320 through being forced to take time off work.

In total, 34 per cent of Britons have missed more than a week of work as a result of injury or illness, with 58 per cent of those missing more than a month and 17 per cent more than a year.

Despite the large number of people taking long periods of time off work, research shows that only eight per cent of these people had insurance to cover the loss.

“Income protection is a key part of personal financial planning often overlooked by consumers,” said Mick James of Standard Life.

“The state will currently pay a maximum of £78.50 through incapacity benefit for every week someone is off on long-term sick leave, although other benefits may also be available like housing benefit or a reduction in council tax.

“People should understand the risks they face if they don’t have a way of replacing lost income during a period of enforced absence from work,” he added.

Standard Life’s research found that just one in 12 people had insurance, while the majority (23 per cent) said they had coped with the financial loss in the past by borrowing from friends and family.

Tags: someone, loss."Income protection, long periods, long-term sick leave, work, taking time, Council Tax