Everything always gets more expensive ... but sound advice helped us with bigger decisions
THE rising cost of insurance, wine and soft drinks will pile on the pounds for family bills. So the verdict from retired teacher Denise Doms is entirely understandable. ‘It seems as if everything is always getting more expensive,’ she says.
Duty on most wines and higher strength sparkling cider will increase by the higher retail prices index measure of inflation from tomorrow, while a new sugar tax will apply to fizzy drinks from April 2018.
But it is a sweeping increase of insurance tax that will be felt most deeply by those paying the bills.
Denise, 63, and her partner Dale Geeves, 66, who is also retired, are basic rate taxpayers and live in Maidstone, Kent.
The couple, whose retirement planning is largely centred on a portfolio of five buy-to-let properties near where they live, are still reeling from the assault on tax relief for landlords announced in last year’s summer Budget.
Now the second rise to insurance premium tax in less than a year – by half a percentage point to 10 per cent – will add to their home and landlord insurance bills.
They both drive too – Denise a Nissan Juke and Dale a Vauxhall Estate. Denise says: ‘All these changes have left me feeling powerless.’
Insurance premium tax will nudge higher in October and raise an expected £900million for the Treasury over five years.
Combined with the rise last November, consumers can expect to pay an extra £24 on average for car and home insurance policies each year. But the cost of insuring a pet, mobile and buying private medical insurance will increase too, adding to the squeeze.
Travel insurance is unaffected – as it is already subject to a higher tax rate at 20 per cent.
Young motorists will be particularly impacted by the penalty increase because they pay higher premiums, but average costs for drivers over 60 have also been subject to sharper increases, of 20 per cent in a year.
And experts warn that this age group is least likely to search for a cheaper deal, which means millions of people on fixed incomes in retirement are likely to be overpaying.
Ian Hughes, of market research
company Consumer Intelligence, says: ‘Older drivers fear that when they are quoted a much cheaper price they don’t have the right cover, but it’s not true.’
Beyond the benefits of switching insurer, Denise says it is also sound, professional advice that will take care of the big financial decisions so she can better manage day-today expenses.
In the latter years of her career Denise worked for the local council as an advisory teacher, looking out for pupils with complex medical needs but who are learning in mainstream schools.
The council organised a special seminar with advisers from Wesleyan to help employees prepare for their retirement, which is how she found her adviser.
She says: ‘If other employees are offered the opportunity, even if they think it’s too early, they should go.’
Elsewhere in the Budget there was good news that can boost income and squash some costs.
For example, fuel duty has been frozen yet again for a year, saving an average motorist £75.
Tax on beer, spirits and most ciders were also frozen. Meanwhile, ‘microentrepreneurs’ operating in the ‘sharing economy’ were given reason to cheer.
Increasing numbers of people rent out their cars, driveways, and homes to strangers via the likes of easyCar Club, Airbnb and JustPark, and use the money to offset monthly bills. From April 2017 they will get a £1,000 tax-free allowance for the cash they raise. A second, separate £1,000 allowance applies to those selling goods or providing services online – for example, selling items on eBay.