Money News May 2013

LIVE LONG AND FROZEN
The recent Budget gave tax cuts worth more than £2 a week in 2014/15 for the under 65s and some better off over 65s will also pay less tax. But almost all those who reached 65 before 6 April 2013 will see their tax allowances frozen for another year. As pensions rise more tax will be due.

From April 2014/15 the personal tax allowance – the amount of money you can have before income tax is due – will rise to £10,000. The extra £560 of tax free cash will be worth £112 in the year to basic rate taxpayers and £195 to those who pay tax at the higher 40% rate. That rate will start at £41,865 in 2014/15, slightly higher than the £41,450 in 2013/14.

People born before 6 April 1948 are normally eligible for a higher, age-related personal allowance. But they have been frozen again at £10,500 for those born 6 April 1938 to 5 April 1948 and £10,660 for those born before 6 April 1938. Those allowances will never be raised and will disappear once the standard personal allowance rises above them. That could happen as soon as 2016/17. When it does those older people will get the same personal allowance as younger ones. Meanwhile the higher rate is taken away if income exceeds a certain level and reverts to the normal lower personal allowance once income exceeds about £28,000.

The threshold at which Inheritance Tax begins has been frozen at £325,000 for a further three years and will now not rise until 2018/19 at the earliest. The estate of a widow, widower or bereaved civil partner will normally get a double allowance. The Capital Gains Tax threshold in 2013/14 is £10,900 and will rise by £100 in 2014/15 and 2015/16.

BANK OF GRAN
Forget the Bank of Mum and Dad, the Bank of Gran is giving more than £5 billion a year to grandchildren. The lucky youngsters are being given an average of around £2500 each by an estimated two million grannies and granddads – about one in seven of the total. And four out of ten – almost six million – grandparents say they have given money in the past or would in the future. The survey, done by Opinium for Investec Wealth & Investment, found that the most common use for grandparents’ largesse was helping to pay for university. Smaller numbers contributed to paying for a home or a wedding. Only a very small number – fewer than 1% – gave money to help grandchildren set up their own business. PENSION REFORM SPEEDED UP
The Government has announced that the state pension reforms (see Saga Magazine March 2013) will be brought forward by one year. The new single tier pension of £144 (in 2012/13 terms) is now planned to start on 11 April 2016. That will mean men born 11 April 1951 and women born 6 April 1953 will come under the new pension system and need 35 years’ contributions for a full pension. The amount will be decided nearer the time but it could be between £155 and £160 a week when it begins. Everyone will have their entitlement assessed under the new and old systems on 11 April 2016. If the old system produces a higher amount that will be protected and paid instead of the single tier rate when the individual reaches state pension age.

The change of date will also mean people paying into contracted out pension schemes at work will pay higher National Insurance contributions a year earlier, from April 2016. They will pay an extra 1.4% of their pay above around £8000. Employers will also pay more in. The extra money will be used partly to increase the funding for long term care.

The savings credit part of pension credit will also end from April 2016. Anyone already receiving it before that date will continue to be entitled under the current rules. But from that date no new savings credit will be paid. At the moment the savings credit can be as much as £18 a week. The guarantee credit part of Pension Credit will remain.

SCAMWATCH
Emails which appear to come from HM Revenue & Customs have been doing the rounds recently. They appear to come from service@hmrc.gov.uk but in fact are fake. The language is not quite right – for example they are addressed to Dear Sir/Madame and use the phrase ‘your fiscal activity’. In fact HMRC never sends out emails like this about tax refunds and you can be sure that any such email is fake. If you click on the links you could infect your computer with a virus which could then compromise its security. If you respond you may be asked later for personal information which could be used to impersonate your identity or steal money from you. If you get any email of this sort never open any attachment or click on any link. And never reply or give any information. You should forward the email to phishing@hmrc.gsi.gov.uk and then delete it. On a PC it is safest to hold down the Shift key while you delete it to make sure it is not stored in the waste bin.

Once a crook gets access to your computer they can use it for another popular scam. They send emails to everyone on your address list claiming to be from you. The story is that you are stuck in some foreign place and your luggage, including your wallet or purse, has been stolen leaving you with no money and no way to get home. The friends are then asked to send you cash via MoneyGram or Western Union. The emails are of course fake and when the money arrives it can be collected very easily by the crooks with minimal ID. If you get one of these pleas it is a scam. Do not send money.

It is also worth making sure that security on your computer or smartphone is high. When you pick a password make sure it has at least eight characters including some capital and lower case letters and at least one or two numerals.

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