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The new tax year: Changes and preparations for April 2022

by Madaline Dunn

The new tax year is almost upon us, and a number of changes are coming into effect in April 2022. These changes could hit you in the pocket, so there may be some preparations you may need to make to ensure you’re ready.

From council tax, car tax, pensions and tax codes, make sure you’ve got your finger on the pulse this April. At The Salary Calculator, we’ll walk you through:

• What is staying the same
• Incoming changes to council tax
• The new changes coming in for car tax
• What’s happening with pensions
• What to check before 5th April
• How to work out any changes to your taxes

What will stay the same in the new tax year?

Although the new tax year often brings in changes to the amount of tax people pay, as per Chancellor Rishi Sunak’s budget, there will be a number of freezes rather than cuts.

Income tax is frozen for this year and will remain that way until 2026. So, the threshold of £12,570 will stay the same, as well as the basic rate tax of 20%, which you will pay on any earnings over that amount up to £50,270. While this may sound positive at first, according to the Centre for Economics and Business Research (CEBR), over nine million workers will pay more as a result.

However, the situation in Scotland is different, as a devolved nation, there are different rates and thresholds when it comes to income tax. Any changes can be viewed here on the Scottish government website.

Capital gains tax which people pay when they make a profit on assets such as a buy to let property, and the allowance on this tax, which is set at £12,300 is also being frozen until 2026.

What changes are coming for council tax?

In February, Chancellor Rishi Sunak announced that roughly 20 million households in council tax bands A to D in England will be impacted by a £3bn council tax rebate. According to the government, this includes 95% of rented properties and the rebate does not have to be repaid.

The same kind of scheme is going ahead in both Scotland and Wales, with the former offering a £150 council tax rebate.

According to the Local Government Association (LGA), those eligible should set up a direct debit to speed up the process. Cllr Shaun Davies, LGA’s Resources Board chairman, outlined that without taking that step, it could “take longer.” This is because the local council will have to reach out first and then individuals will have to make a claim themselves.

While those living in bands E to H in England and Scotland won’t be eligible, you can check your eligibility by visiting the government website.

What changes will come into effect for car tax?

Car tax, otherwise known as Vehicle Excise Duty (VED), is increasing in April, and the amount you pay will depend on a few factors, including how old your vehicle is and the amount of emissions it produces.

To work out how your vehicle will be affected by the new changes, head over here, where you’ll be able to work out if you’ll encounter any increases.

What’s ahead for pensions

When it comes to the changes in store for pensions, there has been a suspension of the triple lock and instead, a new double lock is being temporarily introduced.

As per the triple lock, the state pension rises in line with the highest of the following three measures every year:

• A flat 2.5% rise
• Average earnings growth
• Inflation

It also applied to both the basic state pension and the new state pension. That said, the new double lock means that for 2022-23, the state pension will either rise by 2.5% or the inflation rate, which will, according to the government, last until 2023-24.

What to look out for this April

As the new tax year approaches, experts warn that people should lookout for a number of things.

The first thing to check is your tax code. While the most common tax code for the tax year 2021/22 and 2022/23 is 1257L, which will not change until 2026, it’s your responsibility to check that you’re not using the wrong one. Through checking if your tax code is correct, you’ll also be able to review whether you are owed money from HMRC or owe money.

As recently covered by The Salary Calculator, NI contributions will go up in April, too, so make sure you’re up-to-date with how the upcoming NI contribution changes will affect you.

Likewise, it has been advised that those who had to work from home during the 2020 lockdown or during the 2021/22 financial year to claim should review their entitlement to tax relief. This can be worth up to £125 from HMRC, and people are being encouraged to check what they’re owed before April 5, which could see the introduction of a rule change on claiming to work from home tax allowance.

How to work out any changes to your taxes

It’s always best to prepare for what’s in store, and if you want to check out how your finances will be affected by the upcoming changes in April, head over to The Salary Calculator, where you’ll be able to work out your take-home pay.

Tags: 2022, car tax, income tax, New tax year, Pensions, taxes

Foreign currency and exchange rates in 2022

by Madaline Dunn

After two years of lockdowns and travel restrictions, many will be looking at summer 2022 as the opportunity to finally escape and go on the holiday they’ve dreamt of for so long. That said, when it comes to travelling abroad, there’s a lot of factors to consider – one of them being foreign currency.

Perhaps you’re a little rusty when it comes to exchange rates, or maybe it’s the first time you’re leaving the country; after all, nearly a quarter of Brits have never been on a plane, and one in ten have never left the UK. Whatever the reason, if you’ve got questions about foreign currency, at The Salary Calculator, we’re here to answer all your burning questions. In this article, we’ll explain:

• How the pound is looking against the euro and the dollar
• Whether you should buy foreign currency in advance and what the risks are
• Top tips for securing the best exchange rate and avoiding charges

The pound versus the euro and the dollar

Exchange rates are in constant fluctuation, and a wide range of factors can affect them. Everything from political stability, interest rates and inflation to public debt, speculation and money supply can make a currency go up or down in value.

When it comes to the GBP/USD rate, over the last five years, it has been as high as $1.4328 and as low as $1.1492. That said, currently, the exchange rate is closer to the top-end of the trading range, and the higher it is, the cheaper it is to buy dollars with pounds.

Meanwhile, the GBP/ EUR rate, in 2021 and the beginning of 2022, has also been trading at the high end of its 5-year trading range.

Buying currency ahead of time: The advantages and risks

In some situations, when buying currency, it can be advantageous to plan ahead of time. In cases where you want to exchange large amounts of money, or you’re looking to purchase a currency that’s slightly more obscure than the euro or dollar where the exchange operator may have to order it in, buying in advance could be a good idea. That said, for ‘exotic currency,’ waiting until you arrive at your destination could be a better idea, as local rates are usually better.

You may also be thinking about buying your currency ahead of time in case the pound weakens. However, it’s important to keep your finger on the pulse when it comes to buying currency and check for updates on the exchange market. This can be done at XE.com, where you’ll be able to access live updates on the pound’s value against other currencies. Starting this research around a month before you’re due to head off is a wise idea. If, for example, you notice a trend of the rate steadily going down, buying then and there could help you get the most from your money. A safer bet, though, is to buy half of your travel money before and half later.

For trips where you’re unlikely to need to use cash, to avoid this altogether, it might be worth using a no foreign transaction fee travel card to pay for your purchases.

Tips for getting the best exchange rate and avoiding charges

There are some dos and don’ts when it comes to exchange rates and foreign currency, and below are some of our top tips.

Don’t buy currency at the airport

This is the number one way you will lose out when buying currency. Airport kiosks offer the worst holiday money exchange rates across the board, and they do this because they’re charging you for the convenience. If you’re up against time, or perhaps your trip is a spur of the moment escape, ordering your currency online and picking it up at the airport will help you avoid terrible exchange rates.

When abroad, pay in the local currency

Once you’ve flown to your holiday destination, make sure, when given the option, you choose to pay for purchases in the local currency. This will allow you to avoid both poor exchange rates and currency conversion fees.

Make sure to shop around

There are lots of foreign currency providers in the UK, so it’s worth comparing rates, even if the difference in exchange rates isn’t huge, you can still save a little.

Avoid using your credit or debit card for purchases abroad

When you use your card abroad, it’s likely your bank will charge you a non-sterling transaction fee (usually around 2-3%). Alongside this, you may be hit with additional fees for withdrawing cash and interest on top of the withdrawal. Some cards  charge between 50p and £1.50 for transactions on top of their normal exchange rate charge. Banks who are the culprits for this include Lloyds, TSB and Halifax.

Tags: exchange rates, Foreign Currency, holiday, holiday money

The rising rent issue

by Madaline Dunn

Rent prices in the UK ​​are rising at the fastest rate in five years, further hiking up the cost of living as millions of people feel the squeeze. As the ‘cost of living crisis’ continues, politicians have commented that it’s a “very difficult time” but are failing to take meaningful action.

As more and more low-income tenants are forced to make ‘heat, eat or pay rent’ choices, many argue there has never been a better time to reintroduce rent controls to help address the crisis.

The latest news is undeniably distressing, but at The Salary Calculator, we’ll make sure you’re up-to-date with the latest on personal finance. In this article, we’ll walk you through:

• Why rent prices are rising
• What the experts are saying about the situation
• Whether calls for rent controls are being taken seriously

What’s going on with rent prices?

In the UK, rent prices are on the rise, with statistics from ONS showing that this rise is at the fastest rate in five years. Research shows that the average annual UK rental growth has also reached a 13 year high, with rents increasing by 8.3 % by the end of last year. Unfortunately, there is further bad news, with Rightmove predicting that rent will increase by another 5% in the year ahead. Reports have revealed Wales and the northwest of England saw the largest increase in asking rents. There, rent prices increased by 12%, while in the southwest of England, rent rose by 11%.

Of course, this pinch is pushing many to the brink. Back in 2021, Citizens Advice revealed that half a million private renters in the UK were behind on their rent, with an estimated £360 million owed UK-wide, and within the last year, the situation has not improved. Together, housing charity Crisis and Heriot-Watt University have forecast that over 66,000 more people will be homeless by 2024. Likewise, a survey of 155 English councils found nine in ten town halls expect to see a surge of evictions from private rented homes in 2022.

So, exactly why are rent prices so high? Well, right now, there’s a high demand for renting and a low number of rental properties available, which is in part due to Covid-19’s disruption to the housing market. Propertymark, the membership body for property agents in the UK, has even warned that the situation is likely to worsen, with more landlords planning to exit the market due to “increasing regulation and taxation.”

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, calls this predicament a “dual problem” for renters, whereby rents rise while there are fewer properties on the market to choose from. Speaking to i News, she said: “No wonder we’re hearing so many stories of renters getting dragged into bidding wars, where they’re forced to pay more than the advertised rent in order to have somewhere to live.”

What are the experts advising?

When faced with rent hikes, often it feels like landlords hold all the cards, and there is nothing you can do as a renter to fight back, however as a renter, there are a few things you can do.

Renters are well within their rights to question why their landlord is increasing their rent. Likewise, it’s important to remember that landlords can’t just increase their rent prices by how much they want or whenever they want.

Once you’ve found out why your landlord is hiking your rent, you can also try to negotiate on the price. When negotiating, Citizens Advice recommends that tenants look at similar properties in the area and use those rent prices as “evidence” to show why the hike shouldn’t go ahead or that it should go ahead at a lower rate. The organisation suggests that often landlords will prefer to negotiate rather than lose their tenants.

That said, negotiation isn’t always possible, and in situations where tenants feel like they’re running out of options, they can appeal to a tribunal for rent complaints.

Unfortunately, if you’ve exhausted all your options, you may have to look into downsizing, becoming a lodger, sharing a house with other tenants, or moving into a cheaper area. Speaking about the terrible ultimatum renters are being faced with, Coles said: “Those hoping to stay in their home for another year are facing huge rental hikes. If they can’t afford it, they face the horrible expense and upheaval of a move – as well as the prospect of trading down to something smaller or in a less expensive area.”

Calls for rental controls

It is undeniable that the housing market is out of control in the UK, and to combat this; some are calling for rental controls to be reintroduced back into the UK. Rental controls are regulations that ensure the affordability of housing, and place a cap on the amount a landlord can charge tenants when leasing a new property or renewing a lease. These controls were essentially removed back in the 1980s during the Thatcher era, with the Housing Act 1988.

Now, Sadiq Khan, Mayor of London, is leading the call for change in London, and in the past has said that introducing rent controls in London could act as a “blueprint” for other cities with out of control rent prices.

Elsewhere, in Bristol, local housing chief, Tom Renhard, is lobbying Ministers to access rent control powers and wants to involve other core cities with this plan. The cabinet member for housing and communities argues that while there are “some good landlords”, there are also “a lot of terrible ones.” Adding: “Some [landlords] aren’t doing the repairs even now when rents are going up. If you can’t afford to upkeep a home, then why are you renting it out? People deserve to live in a home that’s fit for human habitation.” Bristol City Council is subsequently held a “Renting Summit” on 2 March 2022 to explore this.

Tags: housing market, Personal finance, rent