The Financial News You Need To Know with Sarah Pennells – March 23 2016

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.

Fraudsters record your phone calls

Action Fraud is warning about a new banking scam, where fraudsters record your phone call to the bank and steal important personal information. The scam starts with the fraudster texting, calling or emailing their victim, pretending to be from their bank.

The victim is told to ring a number, and when they do, they’re redirected to the bank. But the criminals are – somehow – able to record the phone call and get the victim’s ID and security information.

The fraudster then contacts the bank and, using the security details they’ve recorded, takes money from the victim’s account. In the worst cases, victims have been locked out of their own telephone banking. Action Fraud says that if this happens to you, you should call them on 0300 123 2040.

Energy efficient – or not?

A three-year survey of home appliances has found that one in five gadgets uses more energy than the manufacturers claim on the packaging. Independent lab tests found a vacuum cleaner using 54% more energy than claimed, a fridge using 12% more and a washing machine rated one notch lower than was claimed. One of the worst examples was a dishwasher that had to go through a second cycle because it didn’t clean the dishes properly first time round.  Eww!

The research, partly funded by the EU, found that 18 everyday products were breaking energy efficiency laws.

Car hire costs can triple at the rental desk

If you’re planning an Easter getaway, watch out for hidden extras if you’re hiring a car. These range from adding another driver to hiring a child’s car seat or sat nav and can dramatically increase the cost of a hire car, according to icarhireinsurance.

It found that a child’s car seat can cost up to £137 for a week, with the average being £52, while car hire excess insurance cost an average of £111 if bought at the desk and up to £200. This insurance pays the excess if you have an accident or damage the car (even just a scratch). And because the excess can be several hundred pounds, many people buy it at the last minute.

No-one wants to get lost in a foreign country (getting lost in the UK is bad enough!), but if you want to hire a sat nav, you could pay up to £90 for a week (the average price was £68).

Selling online or renting out a room?

One of the Budget announcements that you might have missed was the introduction of a £1,000 a year tax-free allowance for renting out your property and another £1,000 if you sell things online.

The allowances come in from April 2017 and mean you’ll be able to make up to £1,000 from selling things online and a further £1,000 from, for example, renting out a room in your house or your drive. You won’t have to pay tax and you won’t even have to fill in any tax return.

You can already make up to £4,250 a year from renting out a room in a house you live in (through the ‘rent-a-room’ scheme) and that allowance is rising to £7,500 from April 6th this year.

You can’t use the new £1,000 allowance on top of the rent-a-room scheme for the same room (so you wouldn’t be able to make £8,500 a year tax-free from next year), but you could use it for renting out another room or another part of your home.

End of tax year steps to take

April 5th is the last day of the tax year and that means it’s your last chance to use up some tax allowances. I’m not a big fan of racing around just to use up an allowance or two, but if you have money to spare, here are some suggestions:

  1. Pay extra money into your pension. You can pay in up to £40,000 a year into your pension or 100% of your salary (whichever is lower) and you can pay in up to £2,880 if you don’t have any earnings. Money you pay into your pension is locked away until you’re 55, but you get tax relief, which means £1000 paid into your pension costs you £80 if you’re a basic rate taxpayer and just £60 if you pay tax at 40%.
  1. Top up your ISA. This year you can pay up to £15,240 into a cash ISA, a stocks and shares ISA or split between the two. From April 6th you’ll also be able to get up to £1,000 a year in savings interest tax free. So you might think there’s no point in bothering with a cash ISA. But we don’t know how long the tax-free savings allowance will last for (a future government could always abolish or reduce it). You can always take the money out of your cash ISA if you change your mind.

SAVVY TIP: If you have money in a current account that’s paying a high rate of interest, you may be better off keeping it there, as these rates are generally a fair bit higher than you can earn on a cash ISA.

  1. Give your money away! This is more relevant if you’re older and if you’re worried about paying inheritance tax after you’ve died. You have several allowances and one lets you give away up to £3,000 a year to one person or split between several. If you haven’t used up your £3,000 allowance one year, you can ‘carry it over’ into the next tax year. But if you don’t use it then, it’s lost.

SAVVY TIP: There are other ‘lifetime gift’ allowances, including when your child or grandchild gets married. But, the most important thing is don’t give away money that you can’t afford to do without.

Action plan to get more women into senior finance roles

You’ve probably heard about the gender pay gap, where women get paid less than men, but you might not know it’s at its widest in the banking and finance sector.

This week saw the publication of a report by Jayne-Anne Gadhia, who’s chief executive of Virgin Money, into how financial services can get more women into senior roles. It’s not about ‘fairness’ or ‘equality’ (although in my opinion they’re both important!) – there’s a good business case for getting more women into senior roles as companies with men and women at the top tend to perform better.

The report recommends, among other things, tying bonuses to how well or badly a company does against its own target for getting more women into senior roles. Definitely one to watch…