Inflation plunging

Germanshepherdsmum

I believe that what I would call useful maths and finance should be taught. Maths was my worst subject and I would not have been happy studying geometry, trigonometry et al until 18, but the sort of topics MOnica mentions should be taught together with an understanding of how simple and compound interest work, basic bookkeeping and personal financial management. Real life skills rather than topics that few will ever need after leaving school.

I agree. APR, compound interest etc, the huge advantages of even a small overpayment on a mortgage etc. Necessary life information really.

I believe that what I would call useful maths and finance should be taught. Maths was my worst subject and I would not have been happy studying geometry, trigonometry et al until 18, but the sort of topics MOnica mentions should be taught together with an understanding of how simple and compound interest work, basic bookkeeping and personal financial management. Real life skills rather than topics that few will ever need after leaving school.

I will add again, that i am beginning to be a supporter of Rishi Sunak's plan to make students study maths until they are 18.

The course could be based on basic statistics: What is an avaerage, how many there are how they differ, when to use them when not to. What is inflation what does it mean and a how does it work and other related topics that come up on GN regularly and are widely misunderstood.

Despite the number of times it has been explained on GN. 🙄

Germanshepherdsmum

Don’t you realise that inflation going down only means that the rate at which prices increase is going down, not that the prices themselves are going down?

I don’t think that many people do understand that GSM.

Maybee70 Bills will go up when inflation is going down, just by not as much as in previous years.

Prices of everything do not go up at equal rates, some things will see their price rise faster than others and vice versa.

My insurance didn’t go down even though my car is hardly worth anything now! Breakdown cover did.

There was an item on the news about insurances going up, some almost doubling.

The explanation for the huge increases in car insurance was that the price was reduced during lockdowns because people weren't driving as much.

Excuse me? I hadn't noticed the price of car insurance going down at all during lockdowns.

Well, my monthly payments for phone, internet and energy have all gone up; I thought energy costs were going down?

Are premium bonds taxed as that is where my savings are?
No, they aren't, any winnings will be tax-free.

If you have more savings, I'd advise putting them into an ISA.

It took six months after my retirement date for my works pension to be sorted out! It really isn't good enough, is it.

Pension rates do not go up until 5th April, so any pension paid out in the first few days after that will incorporate 5 days pension at the previous years level, so sho very little increase at all. after that each week will incorporate the full rise.

Both my pensions are paid monthly and the amount paid in April is always less than that paid from May onwards for that reason.

You must receive at least an annual statement in respect of your occupational pension - a P60 showing how much you have been paid and how much tax has been deducted.

I received my SP on the 9th April with no increase. I was told if it had been paid on the 10th I would have got the increase.

I don't receive any statement from my work pension, only told there may be a message for me if I log-on to the web-site which is impenetrable, so I always ring them. I last had a statement when I retired in June last year, though I officially finished in August I had earned nothing for two months. I don't know if this has anything to do with it.

I may indeed get a refund but I'm not 'banking' on it haha. I really just wanted to know what my net income was going to be from now on and no one could tell me. It makes it impossible to budget until I get my next pensions. SP should be on the 7th May and WP on 10th. What a joy retirement is!

My modest savings never came into any of the conversations. Are premium bonds taxed as that is where my savings are?

Thanks for your replies btw- I'm impressed with your knowledge of the tax system, of which I am woefully ignorant only ever having been a PAYE tax payer.

My tax code changed recently because the bank notified HMRC about the interest earned on my non-ISA savings account during the past financial year. Instead of being deducted at the bank, the tax due is paid in arrears in the form of an extra amount deducted from this year's monthly private pension payments. I think, if you prefer, there's an option to pay the tax arrears as a one-off lump sum.

I wonder if this is what caused the change in KQ's tax code? If so, HMRC staff should have been able to explain it to her when she called.

I'll probably be back on to them when my pension comes in next months, and yes MOnica, my tax code will be changing again. I think it is because I didn't leave my job until June last year.
You might get a tax refund 🙂

It was just an addendum in case keepingquiet was on the old SP.

Which I've realised she is not!

Thankyou for your replies. I am still finding this a bit of a minefield, but I also find it quite frustrating that the pension rise is paid in arrears, but the tax is taken in advance. It was ever thus I suppose

I'm not sure I understand that. The pension rise is usually from just after April 6th for State and works pensions.

You should receive a statement from your works pension provider telling you what your gross monthly amount will be, how much tax and any other deductions will be each month and the net amount of pension.

M0nica

Callistemon Everyone's pension varies. In a reply here I could not possibly list every variation in pensions people might get as they can be anything from a few pounds to over £200 a week, and vary penny by penny.

It seemed sensible to just take one figure, one oft quoted, of the old basic pension. which I think is still the most common state pension for those over 70. I was giving a general example, not trying to provide an answer of an individual case.

Yes, and your explanation was very good, M0nica

It was just an addendum in case keepingquiet was on the old SP.

Germanshepherdsmum

I read being ‘just over’ basic rate as being just into higher rate.

Thankyou for your replies. I am still finding this a bit of a minefield, but I also find it quite frustrating that the pension rise is paid in arrears, but the tax is taken in advance. It was ever thus I suppose.

Also I'm not earning nearly as much from my pensions as I was when working. Only just in the basic rate if that!
Infact one of the people I spoke to, maybe the tax office, said I wasn't earning enough to pay any tax- so there you go.
I really can't be bothered.

I'll probably be back on to them when my pension comes in next months, and yes MOnica, my tax code will be changing again. I think it is because I didn't leave my job until June last year.

keepingquiet The state pension is not itself taxed directly. However if the sum of your state and private pension put you into a tax paying bracket, then all the tax you pay will be deducted from your private pension.

So let us say your state pension went from £8,000 last year to £8,800 this year and your private pension went from £6, 000 to £6600. Your annual pension went up from £14,000 to £15,400 and the amount you pay tax on goes up from £1430(14,000-12570) to £2830 (15,400-12570). At 20% tax, your tax payable last year was £283, this year it will be £566, arise of £283, the equivalent of £23.50 more tax each month, approx.

All the tax due will come from your private pension only and could mean that your 'takehome' pay from your private pension drops.

Callistemon Everyone's pension varies. In a reply here I could not possibly list every variation in pensions people might get as they can be anything from a few pounds to over £200 a week, and vary penny by penny.

It seemed sensible to just take one figure, one oft quoted, of the old basic pension. which I think is still the most common state pension for those over 70. I was giving a general example, not trying to provide an answer of an individual case.

Ah, I see, I think she means just into the basic rate!

My mistake.

I read being ‘just over’ basic rate as being just into higher rate.

The basic state pension went up from £156.20 to £169.50
Not everyone is on thst, of course.

Some people might not have sufficient years for the full old basic SP and others might be on the new, very much higher, SP.

Germanshepherdsmum

As you are ‘just over’ the basic tax band, presumably you have just slipped into the higher rate and are therefore paying more tax than previously. Not due to the budget but due to an increase in your income.

If keepingquiet is only just over the basic rate of tax then she shouldn't be anywhere near the next tax band which starts at £50,271.

It sounds as if there is something wrong with the calculation but they need to sort it out quickly and not leave people short of money.

keepingquiet if you are receiving a state pension you will not be paying National Insurance, so NI changes to your income.

As far as I know there were no changes to taxation in the budget that should change your tax code.

All that happened that directly affects everyone is that the Chancellor did not increase the minimum income level at which you begin to pay tax.

As things stand no one pays any tax on the first £12,570 of their income. If your income is below that you will pay no income tax at all. You then pay 20p in the £ on the next £37,500 of income.

The personal tax allowance used to be increased every year in line with inflation, but this government has not been doing this and doesn't plan to do this for the next 4 years.

I will try to give a simple example of how this works. Let us say that last year your income was the same as the personal tax allowance, £12,570. If inflation was 10% then this figure should also go up by 10% (12,570 + 1257) to £13,827. It would mean that if your income went up by 10%, you would pay no more tax because your income was still no higher than the personal tax allowance.

However, what is happened is that the government has refused to raise the personal tax allowance so that it remains at £12,570, so if you get any extra money this year - like the rise in the state pension, you will have to pay tax on it.

So keepingquiet your monthly tax bill will have increased because you are now paying tax on any increase in income you have received since 5 April.

The basic state pension went up from £156.20 to £169.50. An increase of £13.30 a week. If your total income is above £12,570 that £13.30 will be taxed at 20%, which equals £2.60 a week, £10.40 a month, plus a similar tax on any extra income from any kind of work or personal pension.

there will be no change in your tax code.