October 2022 Newsletter | Cylchlythyr Misol Hydref 2022
1. Since our September Mini Budget Special newsletter, the new Chancellor, Jeremy Hunt has reversed the vast majority of the tax changes announced by his predecessor, Kwasi Kwarteng. Here is a summary of the combined changes over the last month or so:
Income tax, National Insurance & Corporation tax
- Basic rate of income tax will remain at 20% and the 45% tax band will remain unchanged
- The 1.25% percentage point increase in National Insurance for employees, employers and the self-employed will be reversed from 6 November 2022 to 5 April 2023.
- The 1.25% 'Health and Social Care Levy' due to be payable by working pensioners on their earnings from April 2023 has been scrapped.
- The current dividend tax rates will remain at 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers, respectively.
- Corporation tax rates will increase from 19% to 25% from April 2023 (with a small profits rate of 19% for companies with profits of less than £50,000 and marginal relief available for companies with profits between £50,000 and £250,000).
2. Individuals should have started to receive payments from their energy suppliers as part of the Government's Energy Price Guarantee. Check your bank statements and your energy bills to ensure that payments are being received.
3. From 31 January 2023, non-barcoded stamps will no longer be valid. Royal Mail are operating a swap scheme to exchange non-barcoded stamps for the new, barcoded stamps. Full details can be found at:
www.royalmail.com/sending/barcoded-stamps
4. A recent study highlighted that 1 in 20 UK employees had stopped paying their monthly pension contributions due to cost-of-living pressures. Think very carefully if you are considering this because stopping your pension contributions now, even for a short period, can prove to be very costly as you are missing out on the employer contributions.
Ask Huw & Aled: my father who is in his early 70's lives alone in a large house. He is contemplating downsizing to a purpose-built retirement complex. What are the financial considerations?
On the positive side he may release a substantial sum of capital from the sale of the large house.
However, there will be significant monthly service charges of around £500 - £1,000 per month. These will continue whether or not he remains active and will continue whilst he owns the flat.
When the flat is eventually sold there may well be an “administration fee” payable to the company administering the retirement home. For these reasons, retirement flats often lose value during ownership and the property may have to be sold at a loss.
