Sarah Pennells is a personal finance journalist and the face behind SavvyWoman.co.uk. We think she does a great job at explaining financial subjects in a very clear and accessible manner. You can find her column below where she writes about the latest financial news, and helps you get more from your money.
Tax-free savings allowance
In just over a month’s time (April 6th), most people in the UK will get a new tax-free savings allowance. Called the ‘personal savings allowance’ it means you’ll be able to get up to £1,000 a year in interest from your savings without paying tax on it – if you’re a basic rate taxpayer.
If you’re a higher rate taxpayer you’ll be able to get £500 a year in interest tax free. And if you pay tax at the highest rate of 45%, you don’t get the allowance.
At the moment, interest that you get from money in a savings account has tax taken off, in most cases. The biggest exception is cash ISAs, where all the interest is tax free.
From April 6th, not only will the interest be tax free, up to the £500 or £1,000 a year limit, but all interest from savings accounts will be paid without the tax having been taken off. What that means is that if you owe extra tax, you’ll have to pay it.
SAVVY TIP: HM Revenue and Customs says that any extra tax will be collected through the PAYE system, unless you already fill out a self-assessment tax return. Most people won’t pay any extra tax, as you’d need to have over £50,000 in savings, earning interest at 2% (a tall order these days!) before you paid tax, if you are a basic rate taxpayer.
Chips for Fido
If you own a dog and you live in England or Scotland, it will have to be microchipped from April 6th (dogs in Wales and Northern Ireland already have to be chipped). A microchip is a small chip that has ID information and can be scanned by a vet or dog warden if your dog gets lost or is involved in an accident.
If your dog isn’t chipped, you could be fined up to £500. Vets, dog charities and some pet shops offer microchipping services. The Dog’s Trust has a scheme that offers free microchipping in a number of locations. Don’t leave it until the last minute!
The big news of the weekend was that the Prime Minister, David Cameron, negotiated a new deal that will give the UK what’s called ‘special status’ if it decides to stay in the European Union. The vote to leave or stay in the EU will take place on Thursday June 23rd.
There’s a lot of debate on both sides (and I’m sure there will be a lot more over the next four months!), but the main financial points that David Cameron says he’s agreed are:
- The UK won’t have to join the Euro but can keep the pound.
- The UK won’t have to pay for any bail out of countries within the Euro (such as Greece or Portugal, which have had bail outs in the past).
- The Bank of England will be in charge of making sure there’s financial stability in the UK.
- British businesses can’t be treated worse because they’re not in the Eurozone.
- There will be targets to reduce the amount of regulation governing small businesses.
- People coming into the UK from other EU countries won’t be able to send child benefit back to their children at the UK rate. This will apply to existing migrants from 2020.
- People coming into the UK from other EU countries won’t be able to claim full benefits until they’ve lived here for four years if an ‘emergency brake’ is in place.
SAVVY TIP: This brake can be activated when migration levels are high and will last for seven years.
Air passenger duty abolished for under 16s on March 1st
If you’re due to fly on or after March 1st, you could be owed money. Why? Because Air Passenger Duty (APD) is being abolished for anyone who’s under 16, from March 1st, if they’re travelling economy class.
Air passenger duty is a charge that you have to pay the government if you fly out of the UK, although you don’t pay it when you fly back. The cost, which is either £13 or £71, depending on how far you fly, is added to the price of the flight.
You must be given a refund of the air passenger duty by the airline, but it doesn’t have to pay you back automatically. You’ll normally have to apply online or over the phone to get the money refunded. Don’t miss out!
New car registration – March 1st
From March 1st new cars will have ‘16’ registration plates. The release of these new registration numbers, on March 1st and September 1st each year, can mean it’s a good time to buy a second-hand car, as car owners trade up. If you’re buying a new or second-hand car and you’re taking out a finance deal, it’s worth checking exactly what you’re committing to.
- Find out whether you can hand the car back early if you decide not to keep up the agreement. With some deals, including hire purchase (HP) agreements, you can hand back the car and pay no more money once you’ve paid back half of the overall cost (the loan plus all the interest).
- Check what the penalties are if you have a PCP (personal contract purchase) deal. These generally ask you to pay a lump sum upfront and you estimate the mileage you’ll do before you make a final payment. If you drive more miles you could pay a penalty of hundreds or even thousands of pounds.
- Make sure you can afford the final payment, if you plan on keeping the car and don’t want to take out another finance deal. It’s easy to focus on the monthly payments, but if you don’t have a way of saving for the final payment, you won’t have a car at the end of it.
Embarrassment stops us from haggling
Have you ever haggled? I don’t mean when you’re at a market on holiday (when it’s pretty much compulsory!) but on your local high street? If the answer’s ‘no’, you’re not alone.
Research by a cashback website shows that, while three quarters of us don’t like paying the full price for things we buy, less than a third of us will haggle for a better deal. I’m not a regular haggler, but I have tried it from time to time (sometimes it’s worked and sometimes it hasn’t). Here are my five tips for successful haggling:
- Pick your product: if you’re after the latest must-have gadget, TV or toy, there’s little incentive for the shop to offer you a discount. If it’s a model that’s been on sale for a while or one that’s not a brand exclusive, you’re more likely to get money off.
- Research the retailer: some shops offer more discounts than others. If the retailer has a policy of not offering price reductions very often, it may be less inclined to let you haggle.
- Ask for extras: you may not get money off but you can often ask for accessories or upgrades to be added to the deal.
- Don’t be offended if the shop says no: shops aren’t obliged to offer you a discount just because you’ve asked for one. The shop assistant may not be able to reduce the price, so don’t be offended if they refuse!
- Be prepared to walk away: if you really want to pay less for something, keep looking until you find a shop that will give you a discount or freebies.