Dear Listener

It’s the last newsletter of the year but it feels like the first of 2011. That’s because Saturday’s programme is more about next year than this.

After all it is far too late to say ‘invest in shares at the start of 2010’ or ‘buy gold presents for Christmas 2009’. But with shares up about 10% (or rather that is the rise in the FTSE 100 index) and the price of gold up by a quarter during 2010 that would clearly have been good advice! But – and remind me if I’ve said this before – “prediction is very difficult, especially about the future” (Danish physicist Neils Bohr 1885 - 1962).

We do know though that on Tuesday 4 January 2011 VAT will rise from 17.5% to 20%. That will mean prices rise by just over 2.1% (2.5/117.5) but the tax take by the Treasury will actually go up by 14.3% (2.5/17.5) which is a seventh. Of course, not every VATable price will rise because retailers love their price-points such as £119.99 and £10.49. But one way or another that £12.1 billion of extra tax in 2011/12 will come from us.

So, if you can, buy VATable stuff now before the change. The AA reckons the rise in petrol duty on 1 January and the VAT rise on 4th will add 3.5p a litre to petrol prices. So worth filling up if you can.

And remember that Insurance Premium Tax rises from 5% to 6% from 4 January too, adding nearly 1% to premium prices (1/105) and reflecting a rise of one fifth or 20% in the Treasury tax take (1/5). That will raise an extra £455 million in a full year.

Another £150 million will be saved by abolishing the Health in Pregnancy Grant –but if you are 25 weeks or more pregnant by 1 January you can still claim your tax-free and non-means-tested £190. Find out how from www.direct.gov.uk and put “Health in Pregnancy” in the search box.

And the Child Trust Fund stops for any baby born on 1 January 2011 or late – saving about £520 million a year. It was £250 per child (£500 for lower income homes) but has been £50 (or £100) since 2 August. Welcome to 2011!

Of course you already know all these things if you subscribe to my tweets www.twitter.com/paullewismoney where loads of people keep up with my random thoughts on money 24 hours a day.

**IN MONEY BOX THIS WEEK***

We take a look ahead to 2011 in the context of 2010.

First the economy in general. Where will interest rates go? Will they stay at their historic 22 month low of 0.5%? And what about inflation – now 4.7% (or 3.3% CPI if you prefer) and rising?

Will house prices rise (as they did slightly in 2010) or fall as widely predicted? And if you want to buy how will mortgage rates and terms change in the year?

Banks and building societies are paying appalling rates on our savings – well under 1% typically and often far less. So where are the best deals and how will that change in 2011?

Finally, should you go for investment in these tough times? With gold and copper both at record highs is now the time to metallise your cash? Or are you better with the old stand-by – shares?

Answers – or at least speculation – from my panel of four experts here on Saturday at 1204. Or catch the repeat at 9pm on Sunday. Or you can listen at any time on our website www.bbc.co.uk/moneybox. There you can also read web pieces, download transcripts, follow links, and send us stories or ideas you want us to look into.

This newsletter is available at www.bbc.co.uk/moneybox/newsletter (tell your friends who don’t subscribe) and, as I mentioned, you can keep up with my random but timely thoughts on money 24 hours a day at www.twitter.com/paullewismoney.

Best wishes,

Paul

PS don’t forget the programme trail on Breakfast on BBC 1 between 0845 and 0900 on Saturday.

e-mail Paul Lewis