The summer edition of our newsletter

Change is coming

Although the UK’s election cycle is only six weeks long, it has at times felt longer as the parties vied for attention and, of course, our votes. Claims and counterclaims across debates and interviews were to be expected, but regardless of the outcome, the key issues for most of the electorate are still focused on the cost of living and public services.

Central to these, of course, is tax and the continuing push-me-pull-you between cuts and increases between the parties. Meanwhile, the ongoing income tax threshold freezes and the reduction of the higher rate threshold, alongside the reductions in the dividend allowance and capital gains tax annual exempt amount, are likely to be affecting many taxpayers. Those outside the self-assessment system will not be notified by HMRC if they have tipped into another tax bracket with tax owing. It is down to the individual (or their accountant) to understand their liability and calculate any extra tax owed to HMRC.

With approximately 40% of the UK’s voting population aged 50 or above, it’s not surprising that pension provision has been a feature of election campaigning. Our feature in the summer edition of our newsletter looks at the increase in the cost of retirement since 2023, using the Pensions and Lifetime Savings Association (PLSA)’s relatively modest standard of living expectations.  The latest release from the PLSA finds that of the groups considered – singles and couples living inside or outside London – only a couple living outside London, with both individuals receiving maximum State pension, would receive a State pension income capable of funding the minimum lifestyle in retirement. It is very hard to quantify how much income you will need in retirement, but these figures are likely to encourage those approaching retirement to invest more in their personal pensions if they are able.

Keeping those funds safe is an increasing problem. Fraud is a growing issue for the police and consumers as scammers become more and more sophisticated.  Cybercriminals have moved from more familiar scams – those impersonating known and trusted institutions such as major banks, the Post Office or HMRC – to successfully targeting holidaymakers, with £12.3 million stolen from those trying to book holidays in 2023. Be wary of websites selling holiday accommodation or even package holidays and make bookings through ATOL- or ABTA-registered companies to sidestep fraud. 

With the NHS also providing a focus point in the campaign, we also look at the effects of long-term sickness. Prime Minister Sunak highlighted what he called the ‘sick-note culture’ affecting businesses. The Covid-19 pandemic took a considerable toll on many of the working-age population with 2.8 million workers currently signed off. The level of statutory sick pay (SSP) is one of the lowest rates in Europe and is limited to the first 28 weeks of illness, so without income protection, you could struggle to manage if affected by long-term illness.

For updates on these and other issues that could affect your financial planning, please see our Summer newsletter. we look forward to delivering a post-election analysis of the way ahead in our next newsletter.

Source(s)

 The-State-of-Ageing-interactive-summary-2023-4.pdf (ageing-better.org.uk); Age groups – GOV.UK Ethnicity facts and figures (ethnicity-facts-figures.service.gov.uk); Population estimates for the UK, England, Wales, Scotland and Northern Ireland – Office for National Statistics (ons.gov.uk)