Beat Spreadsheet Phil

GIVEN the furore surrounding the hikes to National Insurance rates for the selfemployed, you’d be forgiven for thinking White Van Man was the only loser from last week’s Budget.

In fact, diligent savers were once again dealt the harshest blow.

The biggest tax raid announced by Chancellor Philip Hammond was on the dividends paid to shareholders. It will raise an astonishing £2.63billion over the next five years.

From April 2018, the amount you can earn tax-free from company dividends will fall from £5,000 to £2,000 a year.

In his speech, Spreadsheet Phil (as he’s been nicknamed by staff in Whitehall) packaged this up as a bid to stop wealthy company directors paying themselves fat dividends to avoid tax.

But figures buried in the Budget documents blew the lid on the charade. The raw data showed a fifth of those affected by the £3,000 cut will be aged over 65. That’s more than 400,000 careful savers who have spent years salting away cash for their retirements.

Many of them will have bought shares in the Eighties, when companies such as British Gas were privatised, or inherited a small holding from a relative. Others will have moved their savings into shares more recently, as it’s now one of the few ways you can beat the misery of low interest rates.

Most victims of the blow will have a little over £50,000 in the stock market and in all likelihood are relying on dividend payouts to tide them through retirement. They will now face an extra £315 in annual tax, on average. What a shame Mr Hammond seems to be oblivious to the pain caused to so many pensioners by year after year of record low savings rates. And what a shame he fails to notice that investing in the stock market for dividend returns is exactly what millions of us will have to do to generate a retirement income in future.

Private investors deserve more support from the Government, not less, because by handing their cash to British businesses they’re helping our economy grow.

Before you go selling your shares to avoid the extra taxes, though, here’s a solution. The annual Isa allowance is rising in April from £15,240 to £20,000.

That should give you enough leeway to shift a large chunk of your money into one of these accounts and get all income tax-free.

There’s a process called ‘bed and Isa’ where a broker such as Hargreaves Lansdown, Tilney or AJ Bell will do the hard work for you.

Effectively, you’ll be selling the shares and buying them back again inside the Isa. There’s no other way of doing it, the experts say.

So beware that if the value of your shares has grown since you bought them, you could find yourself liable for capital gains.

This is levied on profits from selling investments above £11,100 a year (the limit for this tax-year, rising to £11,300 next year).

Someone who bought shares 30 years ago for £2,000 which are now worth £20,000 – a profit of £18,000 – would pay capital gains tax on £6,900. The tax rate is 20 per cent – so you’d face a bill for £1,380.

My tip is to move the cash in stages – some this year, some after your tax allowances are refreshed next month and some in April 2018 when the tax comes in.

Pest control

ONE of those blasted claims firms called me last week about compensation for an accident I’d supposedly had at work.

I tried to tell the caller where to go, but she just kept asking question after question.

Slow on the uptake, it dawned on me that I was speaking to a recorded message.

Presumably, if you answer ‘Yes’ to any question, a crafty employee gets on the phone and talks you into submission.

I suggest you block the number 0121 805 5003. Friends tell me BT’s nuisance call-blocker phones work wonders for stopping these pests calling your landline.

Now we need the Government and the mobile giants to find a way to stop the texts and calls that plague our mobile phones.