Money
State pension warning as hundreds of thousands ‘edge closer’ to having money knocked off payments
HUNDREDS of thousands of retirees are set to pay tax on their state pension for the first time next year.
This is due to a combination of hefty state pension rises and frozen tax thresholds.
It is expected that more than 300,000 pensioners will be told that they need to pay tax when the state pension rises by £473 in 2025.
The figures released this week have confirmed that the state pension is now expected to rise from £11,502.40 to £11,975 per year under the triple lock.
With tax thresholds frozen until 2028, this increase will drag even more pensioners into paying tax for the first time, it has been warned.
This is because the total annual amount of income they receive will be more than their personal allowance.
The allowance is the amount of money you can earn before you have to pay tax on your income.
Under the current rules, this is up to £12,570 each tax year.
It was previously expected that around 140,000 pensioners would receive a letter for the first time this year.
But because of the proposed increase in the state pension, more than 300,0000 people are now likely to get one.
Alice Haine of Bestinvest said: “Add in frozen tax thresholds, with the full new state pension gaining ground on the standard personal allowance of £12,570 and pensioners are edging closer to the point at which their state pension income becomes liable for tax.
“Retirees already receiving a higher state pension may already be paying tax on the benefit, while those receiving a private pension income will see more of that swallowed up by tax.”
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown also pointed out that while rising state pensions are good news, the tax threat is “a hidden sting in the tail”.
She said: “While the full new state pension is currently set at £11,502 and is set to get close to £12,000 from next April it’s conceivable that in the next two years we could see it breach the £12,570 threshold and see pensioners landed with a tax bill.
“It’s also worth saying that many pensioners on the basic state pension system receive more than this as they get a top-up to their income in the form of the state second pension so receive a tax bill even if they have no other income.”
Many pensioners have other pensions – personal or workplace – and HMRC will usually take the income tax due through these pensions, Helen pointed out.
She said: “Those pensioners wholly reliant on the state pension who face paying tax will receive a simple assessment letter from HMRC telling them how much they owe.
“There have been concerns about pensioners being chased for small amounts of tax though HMRC has said they would not look to chase tax amounts that would cost more to collect than is actually owed.”
Why is this happening and is there anything I can do to avoid it?
High inflation rates mean more people in work are getting pay rises to try and keep pace with rising prices.
However, with income tax bands frozen, it means many are being pushed into the next tax bracket.
Laura Suter, director of personal finance at AJ Bell, previously told The Sun: “Pensioners looking to reduce their tax bill need to think about how they can maximise their tax-free income.
“For example, any withdrawals made from their ISAs will be free of any tax. so they can use that pot of money to boost their income without impacting their tax bill.”
An ISA is a type of savings account in which you can save up to £20,00 a year tax-free.
Laura also suggested that couples can organise their finances so they ensure they are each making use of their tax-free allowances, which might involve moving money or assets between themselves.
Helen also added that pensioners might want to use some of their pension to top up their income.
She said: “Most people can access 25% of their pension as a tax-free lump sum so they may decide to use this to top up their income without pushing up their tax bill.”
However, she also warned that pensioners below the personal allowance are going to find it increasingly difficult to avoid paying income tax in the coming years.
The finance expert added: “A full new state pension hits just over £11,500 per year and even relatively modest 3.5% annual increases would see people pushed over the threshold by the time the threshold freeze ends.”
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 – but it’s due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
Money
Ardian and Rockfield seed pan-European student fund with €500m CBRE IM commitment
Ardian will act as investment manager for fund targeting best-in-class assets in undersupplied European markets.
The post Ardian and Rockfield seed pan-European student fund with €500m CBRE IM commitment appeared first on Property Week.
Money
Sainsbury’s introduces new self-service checkout rule at store as customers threaten to boycott
SAINSBURY’S has provoked customer backlash after making a major change at one of its stores.
One of the UK’s biggest retailers has added more self-service checkouts at its branch in Chippenham, Wiltshire.
A spokesperson for the supermarket chain said it had made the change to meet “customer demand”.
But some customers on Facebook have been left fuming, saying the move has made the manned tills backlogged.
Some have gone as far to say they won’t shop at the branch again.
One said: “It’s awful. I went there the other day for a big shop, the queues were down the aisles for the manned tills so we were forced to use the new trolley self scanner.”
Another added: “I went yesterday there is no room at the self scanners especially if everyone has trolleys, think they will lose a lot of customers.”
A third chimed in: “I get why they’re doing it – I was told people walked out with £4K of shopping a few weeks ago but it’s now a very annoying and poor experience going there
“I will not use the self-checkouts – I prefer dealing with people not machines.”
Meanwhile, a fourth commented: “I won’t use the self checkout, I expect human service when (I am) spending my hard earned money in their stores and if they won’t serve me I am happy to leave my trolley and go somewhere else.”
A Sainsbury’s spokesperson said: “We regularly review the services available in our stores to make sure we offer the most convenient experience for our customers.
“We have slightly increased the number of self-service checkouts at our Chippenham store so that we can meet customer demand for this service.
“Our colleagues are on hand to help anyone who may need support using them and we continue to offer serviced checkouts for our customers who wish to use them.”
Sainsbury’s is not the first supermarket to have made a change to self-checkout rules in recent months to customer frustration.
Asda introduced “self-checkout only hours” at one of its branches earlier this year, restricting customers to automated tills only at certain times of the day.
Signs in the Bournemouth store showed customers that from 7am to 8am Monday to Saturday, customers can use just self-scan checkouts.
From 8pm to 11pm on Monday, Tuesday and Thursday and from 7pm to 11pm on Wednesday, all manned tills are closed.
Asda told The Sun the move was a “temporary decision” made during quieter shopping hours and not a company-wide policy.
However, the supermarket chain, also said earlier this year that it will put more staff on tills in a bid to get more shoppers back in stores.
Over the past decade, supermarket bosses have invested in self-scanning tills, convinced customers prefer the speedier style of shopping.
But the move to automated tills has seen some shoppers left feeling left behind and dissatisfied.
Some supermarkets, like Asda, have rowed back on plans to increase the number of self-scan checkouts in stores though.
In August, Rami Baitiéh, the chief executive of Morrisons, announced the supermarket would scale back the number of self-checkouts in stores.
In an interview with The Telegraph, Baitiéh said the company was “reviewing the balance between self-checkouts and manned tills”.
High-end supermarket chain Booths, based in the North of England, abandoned the technology after discovering customers had a more enjoyable experience when interacting with a cashier.
This move aligns with data previously published by The Grocer which reveals service satisfaction has declined by as much as 8% due to the use of self-checkout machines.
If you want to avoid self-checkouts in your local supermarket or retailer branch, you could try scan-as-you-go tech.
They let you scan as you browse, either using their smartphone or a handheld device then checkout in a different area from other shoppers.
You often can bag your groceries as you wander around too, saving even more time.
How to save on your supermarket shop
THERE are plenty of ways to save on your grocery shop.
You can look out for yellow or red stickers on products, which show when they’ve been reduced.
If the food is fresh, you’ll have to eat it quickly or freeze it for another time.
Making a list should also save you money, as you’ll be less likely to make any rash purchases when you get to the supermarket.
Going own brand can be one easy way to save hundreds of pounds a year on your food bills too.
This means ditching “finest” or “luxury” products and instead going for “own” or value” type of lines.
Plenty of supermarkets run wonky veg and fruit schemes where you can get cheap prices if they’re misshapen or imperfect.
For example, Lidl runs its Waste Not scheme, offering boxes of 5kg of fruit and vegetables for just £1.50.
If you’re on a low income and a parent, you may be able to get up to £442 a year in Healthy Start vouchers to use at the supermarket too.
Plus, many councils offer supermarket vouchers as part of the Household Support Fund.
Money
Empiric Student Property raises £56m via share placing
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Money
How famous silhouette on your 50p coin could make it worth 9000 TIMES more – check your change now
A FAMOUS silhouette on your 50p coin could make it worth more than 9000 times its face value.
The pieces were minted in 2019 to commemorate character Sherlock Holmes and his creator, Sir Arthur Conan Doyle.
The Queen Elizabeth II 50p: Sir Arthur Conan Doyle marked 160 years since the birth of the renowned author.
The prolific writer is best known for the popular detective stories featuring the fictional detective Sherlock Holmes.
Stephen Raw’s coin design features a silhouette of Sherlock Holmes smoking a pipe, surrounded by a few of Doyle’s most-famous story titles.
The head side features the fifth portrait of Queen Elizabeth II, designed by Royal Mint engraver Jody Clark.
One of the pieces was recently listed on eBay for £4,500, more than 9000 times the coin’s face value.
The listing read: “Crafted to perfection with a fineness of 0.999, this coin is a must-have for any British decimal coinage enthusiast.
“Featuring a very rare design, this coin is a true gem that you won’t want to miss.”
Others have also been listed on the marketplace, including multiple for £1,000.
While more than eight million of the coins were minted, some are rarer than others.
Certain variations are incredibly sought after by collectors, including ones with errors or special designs.
The Sherlock Holmes 50p coin was also released in different versions including Brilliant Uncirculated Packs, Silver proof versions, silver proof piedfort versions and also gold proof versions.
This, however, is not the only rare coin out there that you could find lying around in your change.
A rare 20p piece recently sold for £75 on eBay.
It was one of a number of coins struck with the wrong dye, meaning that no date is featured on the change.
It is thought around 250,000 coins have the error.
Similarly, a design flaw on a £2 led it to be sold for more than 40 times its value on eBay.
The coin was originally available to buy around five years ago to celebrate the 60th anniversary of Jersey Zoo, but now punters can only get it second-hand.
It is a commemorative coin meaning it is limited edition and would not usually be given as change if you bought something in a shop.
What are the most rare and valuable coins?
The rare Jersey Zoo coin sold for £85 in August.
What makes a coin rare?
Rare coins have been known to sell for thousands of pounds in the past with collectors keen to snap them up.
A coin is considered rare usually if it falls into one of two categories – having a low mintage or being an “error” coin.
The mintage of a coin relates to how many of it were struck and put into general circulation.
The lower amount of a coin that was created and is available to the public, the rarer and, potentially, more valuable it is.
A coin may also be classed as rare if there was a mistake made during the manufacturing process which means very few are out there – an error coin.
In some cases, there are just a handful of each error coin for the public to get their hands on making them incredibly rare and valuable.
You can check a coin’s rarity on sites such as Change Checker which show how many were minted and if they are in demand from coin collectors.
Money
M Core reveals robust annual perfomance
Since January, M Core has acquired 19 assets across the UK, totalling £144m and its managed portfolio now includes 539 properties and 7,740 units, with a total value of £2.6bn.
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Money
How product providers should offer advice
Reading about M&G’s troubles, I can’t help putting them down to the obsession with running an expensive fund platform. But what do I know?
What I do know about is 21st century advice – something I believe is built on the shoulders of giants, such as the Man from the Pru.
These advisers door-knocked, cold called and worked evenings to get families started on a lifetime of saving and self-preservation.
So, why is offering advice so hard these days?
It’s a real shame such a historical institution as M&G cannot remain committed to solving the challenges of advice regulation while making a profit.
It’s a real shame such a historical institution as M&G cannot remain committed to solving the challenges of advice regulation while making a profit
There remains a huge advice gap opportunity for any company who can de-mystify the world of investment and help the man in the street access the wonder of compound interest, just like they used to.
Providing advice seems to terrify those around the board table. Is it impatience from shareholders, short termism on the part of directors or just fear of liability? Probably all three.
I have previously voiced support for a simplified advice regime which could be a gateway to the markets for low value investors taking advice.
To those providers pondering on leaving or entering the advice market, here are my suggestions for making it work:
- Reduce the hurdle of cash savings: Three months spending in cash can take five to seven years for people to save and it is not mandatory as emergency provision. This restriction serves the anxiety of compliance staff more than it serves the interest of investors, and it can be done better.
- Know the outcomes of what you are offering: Charges need to be competitive, and easily justified. Funds need to be liquid, transparent and dependable in their expected returns. Projections need to be realistic and not woefully cautious.
- Think about the liabilities: How will they arise? How is the compensation calculated? Which investors complain? What triggers the complaint? By looking at this in full detail, you can inform the quality of your messaging and have more investors with confidence.
- Get the box tickers out from their desks: Give them sales training, teach them to advise, make them talk to clients.
- Focus on service: Of £198,798 complaints to the Financial Ombudsman Service in 2023/24, £1,459 (0.7%) of them were against advisers. Why fixate so much on the nuances of suitability? With a simple and reliable product proposition, 90% of advice can be algorithmic – making it both efficient and profitable.
- Know your target market and sell to them: Financial services have been a huge contributor to prosperity in the UK. We should believe in the benefit of what we do.
The regulation of financial services in the UK has been a been a huge success in improving the rights and security of consumers. But it is nothing to fear. Our faith in delivering advice to all must endure alongside the products and the markets that will deliver for investors.
Greg Neall is chartered financial planner at Wake Up Your Wealth
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