From 6^th July 2022, the level at which people start making National Insurance contributions (NICs) rose from £9,880 to £12,570.

According to the Treasury, the threshold change means that 70% of UK workers will pay less in NICs, even after accounting for the 1.25% increase through the Health and Social Care Levy which came into effect on 6 April 2022.

The threshold rise was previously planned for the end of parliament, but the former Chancellor brought forward these plans amid the rising cost of living.

If you would like to check how the National Insurance contribution changes will affect you, you can use HMRC’s calculation tool.

If you would like to discuss these changes, please do not hesitate to contact a member of our team.

This year marks Eldon’s twentieth birthday, the big 2-0! You may have seen in the Summer Newsletter that the Eldon team will be celebrating by completing a beautiful (but tough) 20-mile walk around Ullswater on Friday 30^th September.

Donations that the team receives will be directed into our Charitable Fund with the County Durham Community Foundation. Our Fund is to be used to support local charities through the provision of grants, focusing on those that provide financial education, financial planning, and debt management solutions.

If you would like to offer your support, you can find donation details on our CDCF Enthuse page.

Any donations would be greatly appreciated!

If you would like any more information on the above, or our work with the County Durham Community Foundation, please don’t hesitate to contact a member of the team.

The deadline for registering trusts on the new Trust Registration Service (TRS) of 1^st September 2022 is fast approaching and now under 2 months away.

As a reminder, the new rules, which were introduced on 6 October 2020, extended the scope of the TRS to UK (and some non-UK) trusts, regardless of whether or not the trustees have become liable to pay any tax. Following this, many trusts that are not liable to tax, nor expected to be in the future, have been caught under the new rules and must register.

In terms of registering the trust, there are two possible options to achieve this:

• The trustees can authorise an ‘agent’ to register the trust on their behalf – but, as per HMRC guidance, it’s only possible to register as an agent if the business operates as an accountancy service provider, or;
• The trustees can register the trust themselves, with one trustee designated as the ‘lead trustee’ for HMRC correspondence

 
It should be borne in mind that the registration process is relatively straightforward, particularly for non-taxable trusts, and the trustees may wish to consider carrying out the registration themselves, potentially with some support from their financial adviser, rather than pay a third party. Following registration, the trustees need to be aware of their ongoing requirements.

If the trust is liable to tax for any tax year, you must declare on the trust register that the details of the persons associated with the trust are accurate and up to date. You must do this whether there have been any changes or not.

If the trust is liable to Income Tax or Capital Gains Tax, you’ll also need to confirm on the trust’s Self Assessment return SA900 that you’ve either:

• updated the details on the trust register
• confirmed that there have been no changes to the trust on the trust register

 
If the trust is not liable to tax, HMRC do not need an annual declaration.

Once registered, third parties who deal with the trust, such as a financial planning firms like Eldon, will need to see proof of registration, as part of the standard money laundering and ID checks that take place. A downloadable PDF can be obtained through the TRS as evidence.

With rising inflation, you may have found yourself looking more closely at your household budget, prioritising where your hard-earned income and savings should be spent. Whether you are running a monthly deficit or surplus, budgeting is a crucial tool in understanding exactly where your money is going, helping you ensure it is working in the best way for you.

Below, we have compiled a number of tips to make the most of your own budgeting.

Start Simple

If the idea of budgeting sounds daunting, start with a simple spreadsheet of all of your known expenditure. This will include costs that are easy to ascertain – think utility and food bills. Once you have this, you can start to add costs that are trickier to determine, for instance personal grooming and holidays.

Using a spreadsheet will allow you to total up costs quickly and amend figures as your circumstances change. Your budget should be a working document that you consult and adapt regularly, maintaining its accuracy.

Work up to Including Everything

Eventually, your budget should include everything – from large to small expenses. This will help ensure it is an accurate reflection of your finances.

This also includes anything that a partner pays for, even if you keep your affairs separate, to show your expenditure as a household.

Don’t Forgot One-Off Costs

Remember to include discretionary expenditure, or at least an assumption for this. One-off costs (such as car insurance, building work, Christmas/birthday costs) should be accounted for so that the cash is available when such things crop up. Savings for this type of expenditure could also be held in a separate account to help limit overspending. This might also help you to fund things like car insurance on an annual rather than monthly basis, reducing the overall cost.

Save First, Spend Later

It might seem obvious to spend each month and save anything leftover. However, this can make saving optional. Alternatively, understanding how much you can afford to save each month means you can move this away from a main account to a separate savings account on the first of the month. Again, this helps prevent overspending.

Factor In Some Fun

Adding a little wiggle room for something fun, like a cinema trip or coffee with a friend, can make it easier to stick to your budget in other areas. Budgeting isn’t short-term; think of this like a cheat day for your finances.

Ask For Help

If you are just starting out with budgeting, it might be helpful to ask those around you to give you an idea of some of their costs. This can help you to start planning while you are figuring out your actual spending habits, for instance if you are just starting out on your own.

Of course, we are also happy to offer our clients a helping hand with their budgeting. If you have any questions on the above, or would like any more information, please contact one of the team.

Our Summer Newsletter covers an update on Eldon’s developments together with a range of other articles.

I hope you enjoy reading it.

If you have any ideas for future articles or any feedback, please feel free to get in touch.

Click here to view the newsletter.

With the Consumer Price Index (CPI) now standing at 9% for the 12 months to April 2022, the Bank of England has been acting to curb inflation by increasing the base rate, with the most recent rise from 0.75% to 1% taking place at the beginning of May.

We recently wrote an article on the best interest rates available for cash savings, and with rates on an upward trajectory, it is important to ensure you are achieving competitive rates to get the most out of your cash savings.

The best instant access rates are now sitting around a variable rate of 1.2% pa gross, up from 1% pa gross a month ago. As we noted previously, some accounts do offer a slightly higher interest rate but require a linked current account or limit the number of withdrawals.

Fixed rate accounts have also increased, with several providers offering the following: 1-year fixed rate 2.30%; 2 years 2.65%; 3 years 2.70%; 4 years 2.75%; 5 years 2.85%.

In addition, National Savings & Investments (NS&I) have announced that they will increase the Premium Bonds prize fund rate from 1.00% to 1.40%, effective from the June 2022 prize draw. The odds of winning a Premium Bonds prize will also change from 34,500 to 1 to 24,500 to 1.

The increased prize fund rate will see an estimated additional 1.4 million prizes paid out in the June Premium Bonds prize draw. Prizes are tax free and savings are backed by HM Treasury.

Whilst savings rates are rising, your mortgage/loan interest rates could be also, so it is important to ensure that you are achieving competitive rates on any debt too. There are a number of comparison sites available to aid your research.

If you would like to discuss the above, please do not hesitate to contact a member of our team.

All rates quoted are annual, before tax, and mainly for online access as at 23/05/2022.

Whether you are wanting to help your children in the future with a house deposit, wedding or to provide them with funding to pay for university, saving for your children can help them get off to a flying start.

Teaching young people the value of savings can also lay the foundations for a wealthier, more independent life when they reach adulthood.

Maximising ISA allowances is one way to save for children. A Junior ISA (JISA) can be opened for a child up until their 18^th birthday, per current rules, with an annual subscription limit of £9,000 in the 2022/23 tax year. Once opened by a parent or guardian, anyone can contribute to a JISA.

A JISA can either be held as a Cash ISA, similar to a normal savings account, although the money cannot be withdrawn until age 18. There is also the option of a stocks and shares JISA, which can invest in a range of stocks and shares, funds, tracker funds, investment trusts etc. You can split the subscription limit whichever way you like between the two types of JISAs.

Once the child turns 18, the JISA is automatically rolled over into an adult ISA which gets the full ISA allowance of £20,000 per tax year (as at 2022/23). However, a child can open an adult cash ISA once they reach age 16, which will also allow the full annual adult ISA allowance of £20,000.

Therefore, it is possible for a child to hold both an adult cash ISA as well as a JISA from the time between their 16^th birthday and their 18^th birthday. This means that during this period, up to £29,000 can be paid into their ISAs in a single tax year. Over the whole period, this can total tax-free savings of £87,000 in three years!

If you would like to discuss the above further, please do not hesitate to contact a member of our team.

In response to rising inflation, the Bank of England increased the Base Rate in December, February, and March, with this now at 0.75% pa.

As a result, interest rates have increased on both mortgage products and savings accounts. Santander, for example, have now increased the interest rate on their 1-2-3 current account from 0.30% pa to 0.50% pa.

National Savings & Investments (NS&I) have increased the rates on both its Income Bonds and Direct Saver accounts to 0.50% pa. The annual equivalent prize rate of the Premium Bonds remains unchanged at 1% pa, if you are averagely lucky, but there is no guarantee you will achieve this return.

The above noted increases are still short of the Base Rate and although savings rates are changing on an ongoing basis, it appears that not all Banks and Building Societies are passing on the latest rises to savers at present.

The best instant access rate available is now up to 1% pa gross variable, with some providers including an introductory bonus in the headline rate. Whilst it is possible to achieve up to 1.5% pa gross variable, these rates are often linked with current accounts, so will require savers to open this account first if they do not hold one already. This will not suit the majority of savers, where simplicity is desired.

Fixed rate accounts have also increased: 1-year fixed rate 2.05%; 2 years 2.35%; 3 years 2.50%; 4 years 2.55%; 5 years 2.60%.

It is important to ensure that you are achieving competitive rates on your savings and there are a number of comparison sites available to aid your research. We regularly check this for our clients as part of our ongoing service.

Ensuring your funds are covered by the Financial Services Compensation Scheme (FSCS) is also an important consideration when researching savings accounts. The FSCS protects deposits up to £85,000 per financial institution should a financial firm fail. It is important to note that this limit applies per institution and not per account, as many providers share a banking licence, so in this case, the £85,000 limit is spread across total savings with linked providers.

If you would like to discuss the above, please do not hesitate to contact a member of our team.

All rates quoted are annual, before tax, and mainly for online access as at 26/04/22.

As we (hopefully) move towards the warmer weather, you may be planning a spot of spring cleaning. If this extends to your finances and you find yourself organising and decluttering a stack of financial paperwork, we typically recommend that you keep to the following:

• Tax documents – paperwork for the current tax year and the previous six tax years should be retained.
• Valuation/policy statements – typically, the most up to date statement will suffice, but you may prefer to keep previous statements too.
• Bank statements – we usually recommend keeping two years’ worth of documents accessible, although many banks offer these online now.
• ID documents/vehicle documents/financial agreements/policy documents – it may be obvious to some, but these should be retained for their lifetime.

Following this, the remainder can likely be let go, and by let go we mean shredded. Destroying documents securely is extremely important to prevent identity fraud.

We are happy for our clients to pass any unwanted documents to us, and we can arrange for these to be professionally shredded. Alternatively, you can hold onto them until your next planning meeting, and we can take them off your hands then. If you are not sure what to retain, we can also sort through these for you.

If you have any questions in this respect, or would like to discuss the above further, please contact one of the team.

On Wednesday 23^rd March, the Chancellor, Rishi Sunak, unveiled his plans for the Spring Statement in the House of Commons. Here are some of the key changes that may have an impact on you:

Fuel Duty Slash

Fuel duty is to be cut by 5p per litre, the biggest cut to rates ever made. This change comes amidst record fuel prices to help mitigate against the increase in costs. The cut will be in place until March 2023.

VAT relief on zero-emissions schemes

Homeowners installing energy-efficient materials to their homes, such as solar panels or heat pumps, will see a cut in VAT from 5% to zero for the next 5 years from April.

National Insurance Contributions Threshold Increases

From April 2022, the threshold at which individuals start paying National Insurance contributions will increase from £9,568 to £9,880. The threshold will then be increased further to £12,570 in July 2022, aligning it with the income tax personal allowance. This will save the average tax payer more than £330 per year.

However, don’t forget that National Insurance is increasing by 1.25 percentage points in 2022/23 to account for the health and social care levy. So overall, you may still be paying more National Insurance than in the 2021/22 tax year.

Basic Rate Tax Reduces

Basic rate tax is set to reduce from 20% to 19% from April 2024. This means that for every £100 individuals earn in the basic rate band (between £12,570 to £50,270 of earnings for the average tax payer), the income tax payable will be £19 instead of £20. This is a net gain for all income tax payers.

Summary

These measures have arisen against a backdrop of growing concern over rising living costs, with the Consumer Prices Index (CPI) rising by 6.2% in the 12 months to February 2022. Many other parties and charities have raised concerns that the Chancellor has not provided enough support to households.