Dates to help avoid a MONEY MUDDLE
Organisation is key to keeping your finances healthy. Here Money Mail presents the reminders to put in your 2021 diary...
AFTER the Government’s colossal coronavirus spending spree, we can all expect changes to our finances this year. There is now something in store for us all — from state pension pay rises and council tax hikes, to the end of the stamp duty holiday for home buyers. Here, Money Mail takes a look at the key dates worth noting on your calendar . . .
JANUARY Self-employed grant
THE third self-employed grant scheme is due to shut to applications on January 29. The third taxable grant is worth 80 pc of your average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total.
From February, a final grant will be made available to cover freelancers who were eligible for the first rounds of support until the end of April.
Self-employed workers will also be able to spread out their tax due in January over the next 12 months.
FEBRUARY Pension investment
A NEW package of investment options from February 1 will be automatically offered to those aged over 55 planning to pull an income from their pension pots without a financial adviser.
With income drawdown, you take a monthly income from your pot while the rest stays invested.
And the new options — called investment pathways — will offer savers one of four broad investment options to match their circumstances and to best ensure their pension lasts as long as they need it to. The pathways — an initiative by regulator the Financial Conduct Authority — are designed to ensure pension savings are not left to be eaten away by inflation.
There is no obligation to use these pathways. Savers can choose their own investment strategy.
MARCH Train tickets
RAIL fares across England will rise by 2.6 pc on March 1 after the Government decided to increase prices above inflation for the first time since 2013.
Fare increases are usually set using the Retail Price Index (RPI) inflation rate from the previous July — 1.6 pc in July 2020.
The price hike of RPI + 1 pc is coming two months later than the usual annual rise, which gives s eason ticket holders until February 28 to renew at 2020 prices.
Rail minister Chris HeatonHarris said the rise was a result of ‘unprecedented taxpayer support’ for the railways this year.
Budget
THE Budget is due to be delivered on March 3, with an array of measures expected to hit incomes of all households.
Chancellor Rishi Sunak has refused to rule out changes to income tax, VAT and national insurance.
Capital gains tax is likely to be high on the agenda for reform.
A report, commissioned by the Chancellor, suggested raising the levy back in line with income tax rates and cutting the annual exemption from £12,300 to around £2,000 to £4,000.
Any such move would hit investors with large profits, landlords and entrepreneurs.
Stamp duty
THE temporary stamp duty holiday threshold of £500,000 will run out on March 31. Any property sale completed after this date will be subject to stamp duty due on properties over the previous threshold of £125,000.
Mortgage holidays
THE deadline for applications for mortgage holidays and consumer loan payment deferrals is March 31. Borrowers experiencing payment difficulties as a result of coronavirus can pause their repayments as long as they speak to their lender before the end of the month. Interest, however, will continue to accrue.
APRIL Tax year ends
APRIL 5 marks the end of the tax year and the deadline to use your savings allowances: up to £40,000 for a pension and £20,000 for an Isa.
Help to Buy
A NEW version of the Help to Buy equity loan scheme launches this month. It will only be available to first-time buyers purchasing a new-build property.
It works in the same way as the existing scheme (which ends on March 31) whereby the Government loans individuals 20 pc of the value of the property, or 40 pc in London. Buyers then only have to pay a 5 pc deposit, meaning they need a mortgage of 75 pc outside London and 55 pc within London.
Regional price caps will be introduced for the replacement scheme to target buyers who are struggling to save up for a deposit, or who find that their salary is too low to buy a house with a standard mortgage.
The equity loan is interest-free for the first five years, and can be paid back at any time, up to the maximum loan term of 25 years. The new scheme will run until March 2023.
State pension
THE state pension is increasing above inflation by 2.5 pc in line with the triple-lock guarantee.
This promises a rise every year in line with the greater of average wage growth, inflation ( as measured by the Consumer Price Index) or 2.5 pc.
Those who receive the full new state pension, introduced in April 2016, will see their weekly payment rise by £4.40 a week to £179.60. The old basic-rate state pension for those who retired before that date will see their income increase by £3.35 or £3.40 a week, to £137.60.
Private pensions
THE amount savers can stash away in a pension is increasing by 0.5 pc. The so-called pension lifetime allowance will rise to £1,078,900, allowing savers to build an extra £1,450 in tax-free cash.
Lifetime ISA
THE Lifetime Isa exit penalty is expected to return to 25 pc in April. As part of emergency measures designed to ease the pain on savers struggling to make ends meet during lockdown, the Treasury reduced the Lifetime Isa early withdrawal charge to 20 pc.
This applies where someone under the age of 60 makes a withdrawal from their Lifetime Isa and the money is not used towards the purchase of a first home worth £450,000 or less.
With a 20 pc withdrawal charge, a £5,000 early withdrawal would mean paying back the £1,000 government cash bonus. The full 25 pc charge would mean paying an additional £250.
Wages
THE National Living Wage will rise 2.2 pc to £8.91 an hour and will be expanded to slightly younger age groups — starting at 23 instead of age 25.
This is expected to work out at an average of £345 more a year for someone in full-time work.
The National Minimum Wage will also rise, and depends on which age band you fall into.
Council tax
IN ANy year, council tax can rise by up to 2 pc. However, Rishi Sunak has now allowed councils to add another 3 pc to pay for adult social care — so bills could rise as much as 5 pc. They can also add extra on top to pay for policing with forces more and more reliant on cash from your council tax.
The amount will depend on your local authority. For example, in London the mayor has proposed to increase his share of council tax bills by £11.56 a year from April.
Furlough scheme
THE Government’s support package paying up to 80 pc of the wages of workers who have been furloughed is due to end on April 30.
OCTOBER Divorce
THE no- fault divorce will be introduced in the autumn. This will end the need to have a reason for divorce. One or both can apply simply stating that the marriage has broken down.
After 26 weeks, the divorce will be granted. Without the need to apportion blame or to agree divorce, it is hoped it will remove some of the acrimony from the process, which can lead to expensive arguments.
The law has already been passed for England and Wales, so it’s now for the courts to put the systems and processes in place.
NOVEMBER Autumn Budget
THIS is usually held at the end of October or the beginning of November. The Chancellor typically delivers an updated statement on spending plans and the health of the economy.
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