News Archive - August 2014
New ISA introduction leads to rise in savings deposits - 27.8.2014
July saw a significant rise in savings deposits, following the introduction of the New Individual Savings Account (Nisa) rules, according to a report from the British Bankers' Association.
Savers deposited some £4.9bn in Nisas in July, after low levels of deposits earlier in the year. Usually there is a surge in deposits into tax-free savings accounts in April, as the new tax year starts. However, deposits into ISAs in April totalled £3.9bn, compared with £6.3bn in the same month in 2013, and £7.5bn in April 2012. The figures suggest that many savers were waiting for the launch of Nisas before paying in.
The introduction of Nisas to replace ISAs meant that the allowance rose to £15,000 and, for the first time, could be held in cash, or stocks and shares, or any combination of the two. In addition, any money that held in stocks and shares Isas can now be transferred into a cash Nisa (although some providers might not allow partial transfers).
About half the UK adult population - some 23 million people - have a tax-free ISA or Nisa but, with interest rates remaining low, savers are on average only getting a return of 0.86% on these accounts, according to the Bank of England.
Savers deposited some £4.9bn in Nisas in July, after low levels of deposits earlier in the year. Usually there is a surge in deposits into tax-free savings accounts in April, as the new tax year starts. However, deposits into ISAs in April totalled £3.9bn, compared with £6.3bn in the same month in 2013, and £7.5bn in April 2012. The figures suggest that many savers were waiting for the launch of Nisas before paying in.
The introduction of Nisas to replace ISAs meant that the allowance rose to £15,000 and, for the first time, could be held in cash, or stocks and shares, or any combination of the two. In addition, any money that held in stocks and shares Isas can now be transferred into a cash Nisa (although some providers might not allow partial transfers).
About half the UK adult population - some 23 million people - have a tax-free ISA or Nisa but, with interest rates remaining low, savers are on average only getting a return of 0.86% on these accounts, according to the Bank of England.
UK inflation falls, interest rates unlikely to rise - 20.8.2014
The Consumer Price Index (CPI) fell particularly sharply in July from 1.9% to 1.6%, according to the Office for National Statistics (ONS).
Economists had predicted a slight fall to 1.8%, which would still be less than the Bank of England (BoE) target of 2%. This drop has been attributed to summer price discounting from clothing retailers, alcohol prices, financial services and food.
A spokesperson for the Treasury said: ‘The Government’s long-term economic plan is working, with today marking the seventh consecutive month that inflation has been below the BoE’s 2% target.
‘But the effects of the great recession are still being felt and so we have taken continued action to help with the cost of living, including cutting income tax, freezing fuel duty and reducing the costs of childcare. The job is not yet done so the Government will go on making the realistic assessment of what needs to be done to deliver a brighter economic future’.
Economists have said that the lack of pressure from inflation and weak wage growth make it unlikely that the BoE will raise interests rates this year.
Economists had predicted a slight fall to 1.8%, which would still be less than the Bank of England (BoE) target of 2%. This drop has been attributed to summer price discounting from clothing retailers, alcohol prices, financial services and food.
A spokesperson for the Treasury said: ‘The Government’s long-term economic plan is working, with today marking the seventh consecutive month that inflation has been below the BoE’s 2% target.
‘But the effects of the great recession are still being felt and so we have taken continued action to help with the cost of living, including cutting income tax, freezing fuel duty and reducing the costs of childcare. The job is not yet done so the Government will go on making the realistic assessment of what needs to be done to deliver a brighter economic future’.
Economists have said that the lack of pressure from inflation and weak wage growth make it unlikely that the BoE will raise interests rates this year.
Four million still not automatically enrolled - 15.8.2014
A report by the Pensions Regulator shows that 4,443,000 workers have not yet been enrolled in a workplace pension scheme.
Auto-enrolment has so far been rolled out to over four million individuals, while almost nine million were already members of a qualifying scheme.
Executive Director of automatic enrolment at The Pensions Regulator, Charles Counsell, said: ‘A seaside hotel, a scrapyard, hi-tech factories, colleges, care providers, hairdressers and a designer all featured amongst the wide range of employers completing their duties this month. It is a mix which illustrates just how automatic enrolment is gradually becoming part of the fabric running every type of workplace.
‘This summer, we have begun the process of writing to hundreds of thousands of small employers informing them when they need to be ready to meet their new workplace pension duties. This letter is a call to action for employers’.
Staging dates aim to have all employees enrolled by 2017, for existing companies of any size. Minimum salary contributions will also be gradually increased to 3% from employers and 5% from employees by 2018.
Enforcement procedures for auto-enrolment can be viewed on The Pensions Regulator website here.
Auto-enrolment has so far been rolled out to over four million individuals, while almost nine million were already members of a qualifying scheme.
Executive Director of automatic enrolment at The Pensions Regulator, Charles Counsell, said: ‘A seaside hotel, a scrapyard, hi-tech factories, colleges, care providers, hairdressers and a designer all featured amongst the wide range of employers completing their duties this month. It is a mix which illustrates just how automatic enrolment is gradually becoming part of the fabric running every type of workplace.
‘This summer, we have begun the process of writing to hundreds of thousands of small employers informing them when they need to be ready to meet their new workplace pension duties. This letter is a call to action for employers’.
Staging dates aim to have all employees enrolled by 2017, for existing companies of any size. Minimum salary contributions will also be gradually increased to 3% from employers and 5% from employees by 2018.
Enforcement procedures for auto-enrolment can be viewed on The Pensions Regulator website here.
40p tax threshold could be raised - 1.8.2014
Prime Minister David Cameron recently hinted that he would ‘love’ to raise the threshold of the higher tax rate.
In a speech made to workers in Warrington, Mr Cameron acknowledged that many ‘who don’t see themselves as fundamentally wealthy’ are paying the 40% rate, which applies to those earning over £41,865 per year.
According to the Office for National Statistics, the average income for those in full time employment is £29,300 for men and £23,600 for women.
Mr Cameron was keen to qualify his comments, saying: ‘I understand the problem with the 40p rate kicking in when people are not earning a lot of money, and I have to look very carefully at the books before I can make any promises’.
He added: ‘Now I would love to be able to stand here and say we are going to sort all this out, we will raise the thresholds of all these tax rates. I can’t make that promise today’.
In a speech made to workers in Warrington, Mr Cameron acknowledged that many ‘who don’t see themselves as fundamentally wealthy’ are paying the 40% rate, which applies to those earning over £41,865 per year.
According to the Office for National Statistics, the average income for those in full time employment is £29,300 for men and £23,600 for women.
Mr Cameron was keen to qualify his comments, saying: ‘I understand the problem with the 40p rate kicking in when people are not earning a lot of money, and I have to look very carefully at the books before I can make any promises’.
He added: ‘Now I would love to be able to stand here and say we are going to sort all this out, we will raise the thresholds of all these tax rates. I can’t make that promise today’.
