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Money digest: today’s need-to-know financial news

29 March 2016

9:02 AM

29 March 2016

9:02 AM

If the thought of work after the long Easter weekend fills you with dread, look away now. A new study suggests that one in five people think they will be working after the age of 70. Willis Towers Watson, a global financial services firm, found that people under the age of 40 were more likely to think they would be staying in jobs until they were 70. Some of the 2,000 workers it questioned thought they would never be able to retire.

Fiona Matthews from Willis Towers Watson said: ‘These figures put into sharp focus the worries that British workers have about their long-term savings and financial security in old age. This is already causing stress and having a negative impact on their health. Although employment levels are good and wages are rising, many employees are worried about long-term financial stability.’

The Daily Mail reports that wealthy people deferring their income until after the top rate of tax was cut were a major factor in the Treasury taking an extra £8 billion in revenue. The Chancellor had claimed that cutting the rate of income tax paid by people earning more than £150,000 from 50p in the pound to 45p would lead to the Treasury reaping more money. But the Office for Budget Responsbility attributed much of the gains to high earners shifting money between tax years. Many high earners chose to defer their income until the 2013-14 financial year, when the top rate of tax was cut from 50p to 45p.

Meanwhile, more than six million UK workers could find their take-home pay cut from April after the new flat-rate state pension comes into effect. The move, first announced in the 2013 Budget, will boost the Treasury’s coffers by £5.5 billion a year. Most of that sum will be raised from public sector employers and employees by higher National Insurance payments. An estimated five million workers in the public sector and 1.5 million in the private sector will be affected. They will have to pay an extra 1.4 percentage points of NI on their earnings – equivalent to a deduction of up to £37 a month.

Former pensions minister Steve Webb, now director of policy at Royal London, told The Times: ‘I think the Chancellor had hoped that no one would notice this rather large tax increase smuggled out in advance as it was some years ago.’

Also in The Times is a report that a multimillion-pound Revenue & Customs publicity campaign to stamp out tax evasion and avoidance used an advertising agency ultimately controlled in an offshore haven. HMRC spent more than £6 million on the campaigns, including £300,000 specifically on offshore evasion. Among the agencies used was TNS, a research agency, whose ultimate parent company and controlling party is WPP, the world’s biggest advertising company which is incorporated in Jersey.

The most arduous parts of moving home have been identified in a new survey, with money, stress and time constraints topping the list. Estate agent found that 55 per cent of people are most fearful about not getting the price they needed for their property. The stress of the selling process was a big worry for 46 per cent, while 43 per cent said not being about to sell their home in time caused them anxiety.

As a nation of pet lovers, it should come as no surprise to learn that insurers paid out a record £657 million last year in claims on pet insurance. Dogs accounted for most claims, with more than 680,000 cases – while there were just under 200,000 claims for cats. The average claim was for £721. The Association of British Insurers says despite the payouts most pet owners are uninsured and it reminds everyone there is no NHS for pets.

Mark Shepherd, general insurance manager at the ABI, said: ‘The record levels of claims handled by pet insurers highlights that owning a pet can be costly as well as rewarding.’

Looking ahead to today, the Bank of England will reveal its findings on lending standards in the buy-to-let market. Early indications are that the Bank thinks standards are not be as stringent as they could be. There may also be news of regulations for the sector, which governor Mark Carney has said could pose one of the greatest risks to UK financial stability.

Ray Boulger of Charcol mortgage brokers told the Today programme that he expects the Bank will either require banks to apply ‘stricter stress tests in the rental cover calculation’ and require the banks to assume a 3 per cent rise in interest rates or restrict the amount of buy-to-let lending the banks do.

And if you’re thinking of sending any letters today, bear in mind that the price of a First Class stamp goes up 1p to 64p and second class is also up 1p to 55p. The Royal Mail says the rises are needed to help ensure the sustainability of the Universal Postal Service. Back in the year 2000 the price of a 1st class stamp was just under 30p, with second class just under 20p.


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