Money News

WHAT A STEEL
Hundreds of thousands of coin-operated machines have had to be upgraded to take the new 5p and 10p coins that are going into circulation shortly. The new steel coins will have the same diameter and design as the old ones. But the eagle-eyed will notice they are slightly thicker. That is necessary to make them weigh the same as the older coins so banks can still count them by weight.

The Government is saving up to £8 million a year in metal costs. But that is dwarfed by the estimated £80 million cost of upgrading every coin slot in the UK – from snack machines at stations to parking meters and payphones.

Although the operators are confident the vast majority of machines will now happily take the old and new coins it will not be possible to upgrade some of the older mechanisms. They may have to be adapted to refuse all 5p and 10p pieces. And of course that will mean rounding up prices to the nearest 20p.

The new steel coins are dated 2012 and will be in your change very soon. They can be sorted from the older ones using a magnet and it may be worth checking your change to make sure you have some old coins just in case you find an older coin machine that has not been upgraded to take the new ones.

CASHING IN
If you have not used up this year’s cash ISA limit of £5340 you have until April 5 to put the money into an ISA. In practice that means sorting it out well before the end of March as some special offers will be closed before the deadline is reached. It is tempting to go for the highest interest rate. But some of the best deals will inevitably come with restrictions. As none of us knows what the future holds it may be best to choose the highest unrestricted rate. Then you can take money out whenever you want without losing any of the interest your money has earned.

If you are happy you will definitely not need it for two or five years you could tie it up in a fixed term ISA. They will have better rates. But beware of tying the money up for too long as you never know where rates are going – they may be better in a year or two than they are now leaving your ISA looking a bit sad.

The same decisions are needed when it comes to new ISA money to use up the £5640 you can save tax-free in 2012/13. By the time 6 April arrives the rates will probably not be quite as good as they were for your 2011/12 money.

If you already have money in an ISA account – and that could total more than £60,000 if you have been maxing out your ISA allowance since ISAs began in 1999 – you also have to find that money a good home for the future. That means finding the best ISA accounts that allows you to transfer money in from other ISA accounts. Remember that you can only move a cash ISA by opening a new one and getting the provider to move the money. If you take it out you will lose the ISA status.

To find the best deals use a new comparison website www.savingschampion.co.uk which takes no money from the savings providers it lists. So you can be sure those at the top of its best buy tables really are the best.

RECLAIM YOUR TAX
If you are a non-taxpayer then ISAs are not the best place for your money. You can get higher rates in standard savings accounts but remember to fill in form R85 to register to get your interest tax-free. Otherwise the bank or building society will deduct 20% tax automatically. If you have had money in a savings account in the past when you were a non-taxpayer and tax was deducted you may be able to claim it back. Unfortunately the time limits for doing that have been shortened. You have until March 31 to claim back the tax wrongly deducted from your savings in 2006/07 and only until 5 April to reclaim tax wrongly deducted in 2007/08. Once those dates are past it will be lost forever. HM Revenue & Customs admits it has £200 million it should never have taken. Make sure you get yours back before it is too late.

More information www.hmrc.gov.uk/taxback

Council Tax reduction
If you live alone you can get your council tax reduced by 25%. This single person’s discount is a valuable concession and councils will usually send a form each year to confirm you are still entitled. Make sure you fill it in every year or you could find your council tax rise by a third. Even if there is another adult in your home you could still qualify for the single person’s discount – for example some students and carers are invisible to the council tax rules.

Council tax benefit can also reduce your council tax – often to nothing if you have a low income, up to £10,000 of savings are ignored completely. We know that millions of older people do not apply for this help. So if you find it hard to pay your council tax do ask your local council to see if you are eligible. It is important to claim this year because the way council tax benefit is administered will change from April 2013. Instead of one scheme for the whole of Great Britain with national rules laid down by Parliament each local council will decide on its own rules and will have to cut the cost of council tax benefit by 10%. The Government has promised that anyone over pension age will not lose out from the changes. But until the details of the schemes are published in the next few months we will not know exactly how that promise will be fulfilled.

More information: Paul Lewis’s guide to council tax benefit and other concessions is available free here www.saga.co.uk/emails/SD00379-PB-M/PDFs/Claim-it.pdf

Less into your personal pensopm
Some people in work and under pension age will be earning slightly more state pension from April but slightly less will be going into their own personal pension. At the moment people paying into a personal pension (and the same rules apply to a stakeholder pension or a company pension that is called ‘defined contribution’) can ‘contract out’ of the state second pension (S2P), also known as SERPS or additional pension. Because they are not paying for this bit of the state pension a small amount is taken from their employer’s National Insurance contributions and paid into their own pension instead.

From April this system will end and all these people will be contracted back in to the State Second Pension. Every year they pay into S2P they will earn at least £1.60 a week extra on their state pension. Those earning more than £14,100 in a year will get more than that although the rules are in the process of being changed. The 1.4% of their earnings which is currently paid into their personal pension will stop.

The change does not affect people paying into a company scheme that promises to pay a pension related to salary. The Government plans to end contracting out for this group in the future but no final decision has been taken. When it does happen this group will have to pay higher National Insurance as they currently get a 1.4% rebate off their contributions.

More information www.direct.gov.uk and put ‘contracting out’ in the search box

e-mail Paul Lewis on paul@paullewis.co.uk