The Salary Calculator

The Winter Fuel Payments

by Madaline Dunn

There’s no denying that times are hard right now. On top of this, the winter months can be the most difficult time of the year, with much higher energy demands.

Fuel Poverty Action, a grassroots campaign striving to bring an end to fuel poverty, has even warned Prime Minister Liz Truss that tens of thousands will be at risk of death without serious intervention around the cost of living crisis. The campaign organisation has specifically called for a basic level of energy for every household, enough for people to maintain enough heating, lighting, cooking, and other essential services.

The government is yet to introduce this kind of scheme but has brought in a number of other financial aid schemes.

One of these schemes is Winter Fuel Payments, an initiative that was brought in back in the late nineties but has received a boost in response to the crisis. At The Salary Calculator, we’ll explore:

• What the Winter Fuel Payments are, and who is eligible,
• How much you receive and when you will receive the payments,
• How the payment will be issued,
• Whether there is additional help out there to help with the cost of living.

What are Winter Fuel Payments and who is eligible?

The Winter Fuel Payments were launched back in 1997 and were introduced in order to assist older people with fuel payments in the colder months. However, in order to be eligible for this financial assistance,  there are a number of conditions that must be met:

• You must have been born on or before September 25, 1956.
• You have to have lived in the UK for at least one day during the week of September 19 to 25, 2022.

That said, if you can not meet the second condition and did not live in the UK during the qualifying week, you could still be eligible if you can fulfil the following criteria:

• You live in Switzerland or a European Economic Area (EEA) country,
• You have a “genuine and sufficient link to the UK” (this includes having lived or worked in the UK previously or having family in the UK.

You will not be eligible, however, if any of the following applies:

• You are in hospital and have been receiving free treatment for over a year,
• You require permission to enter the UK,
• You were in prison for the whole week of September 19 to 25, 2022
• You lived in a care home between June 27 and September 25, 2022, and received certain benefits.

How much will you receive and when will you receive the payments?

When it comes to Winter Fuel Payments, you could receive between £250 – £600 to help pay your heating bills, and the amount you will receive is dependent on a number of factors, including:

• How old you are,
• Whether you live alone,
• What benefits you receive.

This year, the amount you will receive includes a Pensioner Cost of Living Payment worth between £150-£300. The amount you receive will be tax-free and paid in addition to any other Cost of Living payments. These payments will also not affect the other benefits that you’re eligible for.

How will the payment be issued?

According to the government, while most payments will be issued in November or December, pensioners should be paid by January 13, 2023. Government advice is for recipients to check their account between November and December to review whether or not they have been paid.

Although the process should take place automatically, if you have not received a payment and you are eligible, directly contact the Winter Fuel Payment centre to report the issue.

For more information about the payment scheme, head over to the Gov.uk website.

Is there other help out there?

Although this particular initiative only applies to older adults in the UK, there are further initiatives for people struggling with the cost of living crisis. This includes:

• The Energy Bills Support Scheme: A non-repayable government discount of £400 made in six instalments from October 2022 to March 2023 (£66 in October and November and £67 in December, January, February and March.
• The Warm Home Discount Scheme: A £150 discount on energy bills for those receiving certain benefits.
• Fuel vouchers: For those on prepayment metres.

For more help and advice around the cost of living crisis, visit the Citizens Advice website.

Tags: cost of living, Economy, Financial aid, Pensions, Winter Fuel Payments

The cost of living crisis: Working from home versus at the office

by Madaline Dunn

The working from home revolution has brought many people flexibility, more job satisfaction and savings; however, as the cost of living crisis bites, some are starting to weigh up whether it’s still a better option than in-office working. As the winter months draw nearer, some think that returning to the office might help them save money.

At The Salary Calculator, we’ll explore:

• The current cost of living crisis and employment trends,
• The cost of working from home,
• Whether working from the office can save you money.

Cost of living hike and employment trends

According to figures from the ONS, around 40% of adults in Britain now work in a hybrid working model, with 30% of the UK workforce working from home at least once a week – 8% of workers didn’t even step foot in the office for the entirety of 2021. Research from last year also found that around 70% believed that workers would never return to the office in the same way ever again, with the majority expressing a preference to work from home either full-time or “at least some of the time.”

However, this was before the cost of living crisis had taken a turn for the worst. Now, around 89% of adults (46 million people) report that their cost of living is continuing to increase. While almost everything is on the rise, with Citi investment bank warning that inflation could exceed 18% in January, rising heating costs are for may their primary concern. It’s not surprising considering that the energy price cap was due to reach £3,549 a year in October. However, the new Energy Price Guarantee means that a household with average usage will pay £2,500. This means that the 80% rise in energy bills that was due to come into effect on 1 October will be avoided, but many will still be faced with bills they can’t afford.

As Paul Johnson, director of the Institute of Fiscal Studies (IFS), says, the energy freeze is “very poorly targeted” and one that will benefit “better-off people.” This was echoed by Torsten Bell, the Resolution Foundation’s chief executive, who said, despite the support being “big” and “bold,” families should still expect a “tough winter ahead, with rich households getting twice as much cost-of-living support as poorer households next year.”

Experts forecast that without the government intervening, the number of UK households in fuel poverty could reach 12 million by January, with The End Fuel Poverty Coalition highlighting that 42% of households will be unable to afford adequate heat and power from January. The situation is so dire that the head of the World Energy Council (WEC) has said that the UK will have to begin to develop a spirit of “radical generosity” in order to prevent the loss of lives.

With energy becoming so expensive, it appears that the trend of working from home may phase out. So let’s break it down – which option is cheaper?

The cost of working from home

According to Uswitch, by winter, those working from home, rather than the office five days a week, will use around 75% more gas each day and 25% more electricity. Analysis from New Statesman’s business editor Will Dunn also found that poorly insulated homes in the UK could cost over £30 a day to run. Considering that a study conducted by EDF in partnership with property data platform, Sprift, found that only 58% of the 21 million homes across England and Wales studied meet insulation standards of 1976 or earlier, many people will find themselves paying more.

Specifically, research shows that from 1 October, a large 32kW boiler will cost £4.80 an hour to heat, boiling a kettle will cost 10p, and running a desktop PC and monitor will add £1.25 a day at the new rate of 52p per kilowatt hour. However, on the childcare front, while not always ideal, working from home can mean that you pay less in childcare costs.

Speaking about this, Uswitch energy spokesman Ben Gallizzi said: “Using extra energy when the heating would usually be off will be especially noticeable on bills this year with prices rising by 80%.” Adding: “Not only do people working from home use more energy staying warm, they are also cooking lunch and making cups of tea, as well as running computers, TVs and phone chargers.”

Can working from the office save you money?

Many of those working from home are beginning to feel the pinch, and research from MoneySupermarket.com shows that now around 14% plan to head to the office more often to help save on energy bills. Interestingly, this figure rises to 23% for those aged 18-24 years old.

That said while returning to the office means you’re likely to save on energy bills, it will cost you in other respects. Working from the office means travelling in, and transport costs are currently also pretty high. 

If one travels by car, factoring in Confused.com’s estimate that the average daily commute equates to 5,040 miles a year, and NimbleFins estimation that the real total cost per mile of driving is roughly 47p, this means annual commuting costs will reach around £2,370.

If you don’t drive, travelling by train can be equally, if not more expensive than driving. New rail fares mean that the current price of the typical annual rail season ticket is £3,263, which is due to rise further by £433 next year. Meanwhile, The Times reported that a return journey from Reading to London would see commuters pay £4,860 for an annual season ticket, which is also £93 a week. The paper made a point to outline that this doesn’t factor in additional costs, for example, buses, Ubers and taxis from the station to your place of work. A monthly Oyster Travelcard for TfL services, for example, costs between £147.50 to £270 per month.

For parents considering returning to the office, it’s also important to take into consideration childcare costs. Childcare can be expensive, with research from the Coram Family and Childcare charity finding that the average price for children under two in a part-time nursery sets parents back around £138.70 a week. Money Helper reveals similar figures, with a full week of childcare costing £263.81 a week, which, over 39 weeks, reaches £10,289.

Final thoughts

With so many variables to factor in, the best way to determine what will be best for you and your finances is to review your bank statements and reflect on where you can make savings. If you’re able to travel to work via a less expensive medium of transport, pack your own lunches, and, if you have children, find suitable and affordable childcare, returning to the office might work in your favour.

However, if you live a significant distance away from your workplace’s office and would have to use public transport for travel, it might be best to continue as you are. Moreover, there are some hints and tips that can help you save energy when working from home, for example:

• Turning your appliances off at the mains can save you £55 a year,
• Ensuring you turn off the lights in rooms you’re not using can save you £20 a year,
• Switching to energy-saving light bulbs can save you £13 per bulb per year,
• Turning your thermostat down by just 1 degree can save you £150 a year,
• Only filling the kettle with what you need can save you £36 a year,
• Covering your pans with lids means your food will cook quicker, and you’ll use less energy – likewise, if you’ve got electric hobs, make sure to keep them clean; dirt and grease will make them less energy efficient.

While these savings may seem small in the grand scheme of things, they will all add up and leave you with more money than you expected while exerting minimal effort.

Tags: cost of living, Economy, Jobs, Working from home

The National Insurance threshold increase and what it means for you

by Madaline Dunn

In the midst of numerous cost of living hikes, it’ll likely be comforting to learn that as of 6th July, millions of people will be slightly better off as a result of the National Insurance (NI) threshold increase.

At The Salary Calculator, we’ll walk you through:

• How much the threshold has been increased by
• Why the threshold increase is happening
• How this will affect people
• How to check what difference it will make to your take home

How much has the threshold increased by?

From 6th July 2022, the threshold for National Insurance contributions increased from £9,880 to £12,570. This means that people will now have to earn additional £2,690 before paying towards National Insurance.

Why has the threshold been increased

Back in April, the government announced that despite the cost of living crisis continuing to worsen, NI would be increasing by an additional 1.25% in an effort to aid NHS recovery, and fund the Government’s share of social care. However, the government has now raised the NI threshold as part of what it’s called the Chancellor’s “wider vision for a lower tax economy.”

How will this affect people?

This threshold increase means that some people will see a boost in their July pay packets. Experts have outlined that those earning around £31,500, or less will notice the most significant difference. Moreover, the UK government has said that almost 30 million working people will benefit overall, with the average worker saving over £330 in the year from July.

According to a previous statement by the government, 70% of NI paying workers will pay less, and 2.2 million people will no longer be required to pay NICs as a result. According to figures by HW Fisher, those earning £14,000, will save around £342.37 a year, meanwhile those on £20,000 will see savings of £267.36.

A more in depth comparison of how the situation has fluctuated in recent months shows that someone earning £20,000 would have been faced with a monthly NI payment of around £104 before April. This then rose to £112 following the hike and now, as a result of the July changes, will drop to approximately £82.

That said, while any money saved is arguably a win, it’s important to put the savings into a broader context, Alice Haine, personal finance analyst at investment platform Bestinvest, for example, has noted that the £330 workers will save, “won’t stretch far when you realise that only equates to £27.50 a month”.

While Haine outlined that for some, £27.50 could be the difference between “having dinner every night and sometimes going without,” for many it will “barely make a dent in their budgets as they struggle to pay the household bills amid rampant inflation as soaring food, fuel and energy prices become the norm.”

Stevie Heafford, tax partner at accountancy firm HW Fisher, echoed similar sentiments and when asked if it will help to solve the current crisis, he said: “The very short answer is, no. Those with lower income will save more in pure monetary terms, but they will be more exposed to the general increases in cost of living as they are less likely to have any sort of ‘buffer’.”

How can you check what difference it will make?

You can review how much of a difference this will make to your take home pay by heading over to The Salary Calculator, where you will be able to figure out exactly how much you’ll save.

Tags: cost of living, Economy, national insurance, NI threshold, take-home pay

Personal finance education in the UK

by Madaline Dunn

Although personal finance is now an educational requirement in the UK, it’s well known the curriculum around this topic is not up to scratch. Many leave school without a real grasp on the ins and outs of personal finance, whether that’s interest rates, mortgages, or managing money, and as a result, research shows this leaves youngsters vulnerable to making harmful decisions around their finances.

Financial literacy empowers people to make informed choices about how, when and where they spend their money, and ensure they’re not left open to unsustainable borrowing, and unwise investments that could lead them down a road of debt.

At The Salary Calculator, we’ll explore why education around personal finances in the UK needs to improve, and the consequences of financial illiteracy.

A lack of financial literacy and its consequences

According to research, we begin to develop “vital money habits and skills” between ages three and seven. Despite this, only around 38% of children and young people receive some form of financial education while in school, and in 2016, half of Brits failed a financial literacy test run by the OECD, placing Britain significantly below France, Norway and Austria.

The consequences of this lack of financial literacy, means that young people are largely unprepared to deal with the different financial situations they are confronted with as they move into adulthood.

Research from Santander UK has even found that two-thirds of young people attribute their debt problems to a lack of financial education. Meanwhile, an inquiry commissioned by the Centre for Social Justice (CSJ) in partnership with Lowell, found that 24 million adults are not confident handling their money on a day to day basis, and one in eight young adults who took on a “buy now, pay later” credit agreement were eventually contacted by a debt collector.

Speaking about what the Santander UK study shows, Mike Regnier, CEO of Santander UK, said that fostering key money management skills at “an early age” will ensure that future generations leave school “equipped with the foundations for financial independence, and the skills to make better financial decisions.”

Meanwhile, John Pears, UK Chief Executive at Lowell, said that now, more than ever, with the cost of living crisis reaching extreme levels, financial literacy would be a “strong barrier.” Pears admitted that as a country “we just aren’t good enough at it,” and outlined that the company’s own customers have outlined how “ill-prepared” they are when facing debt. He added: “The lack of financial literacy and budgeting skills creates spirals of debt that are hard to break and have a long-lasting impact, individually and on our economy.”

Education around personal finance should start at school

The CSJ and Lowell conducted a poll of 4,000 adults and found that 44% of all adults, and two-thirds of those aged 18 to 34, believe that if they had received financial education, for example around basic money skills, they would be more financially prepared for life and its challenges. Yet, in the 2021-22 Young Person’s Money Index report, just 8% of young people said they received most of their financial education at school.

Yet, according to Fintec, when children receive education around finances at school, they’re more likely to handle their finances better, save up frequently, have a bank account and generally feel more confident navigating finances.

Speaking about the advantages of educating children about finances from a young age, Martin Lewis, the founder of MoneySavingExpert.com, said that children are “professionals at learning.” He added: “Teaching children is easier than teaching adults. That’s why, in our education campaigns, we focus on children –  because the job of educating society is so much bigger. If you start with children and keep doing it over 30, 40 years, you’re going to work through [society] better.”

Programs and initiatives to enhance education

Back in 2014, financial education was brought into the secondary school curriculum, as a component of the “citizenship” element of the national curriculum at key stage 3 and 4. This was introduced as a way of providing students with guidance on managing money, and tools to plan for their future financial needs.

However, despite being compulsory, uptake of financial education in schools is actually quite low. According to Russell Winnard, a former teacher and head of programmes and services at Young Money, there is room for improvement in this area. In 2017, he outlined: “It is compulsory in every secondary school, though that does not apply to academies and free schools. Around 35% – 45% of schools were actually delivering financial education in 2014. Two years on and we estimate it’s still only 40% doing so.”

This is something that has been echoed more recently by Martin Lewis who expressed similar sentiments. Speaking to Future Learn, Lewis said: “There is financial literacy on the national curriculum, but it’s guidance rather than compulsory for many schools. It’s only on the curriculum for secondary schools in England. We have a charity called Young Money where we have a free financial education textbook in every school now, and that’s been incredibly successful, but we still have a problem that some schools don’t teach it, aren’t trained to teach it and won’t.”

To tackle the financial education gap, a number of recommendations have been made by CSJ. Some of these recommendations include:

• Introducing a new legal requirement for students to receive “at least three ‘experiential’ financial learning lessons” over the course of their school career;
• A new ‘whole-family’ approach to financial education. According to the report, this would involve bringing in parents and carers into the equation, and introducing what the CSJ called community infrastructure like Family Hubs;
• Bringing in funding for care leavers and disadvantaged young adults to attend ‘just-in-time’ financial education programmes to reduce cases of rent-arrear driven homelessness;
• Introducing adult financial education as part of the Government’s £560 million adult numeracy scheme, ‘Multiply’;
• Completing of the welfare reforms initiated in 2012 by rolling out ‘Universal Support’ to provide vulnerable people with digital and financial skills;
• Promoting the ‘Help to Save’ scheme to increase uptake among those who are eligible.

Commenting on the changes that need to be implemented, Robert Halfon MP, Education Select Committee Chair, said: “We must be bolder – critically, by adding financial education to the curriculum in primary school in PHSE lessons where money management remains absent in England. Adults of all ages also need opportunities to develop critical financial skills throughout their life, whether that be in the workplace, further education or via the welfare system.

Tags: Economy, Finances, Financial education, Managing money, Personal finance

Coping with financial challenges: Ways to save money in 2022

by Madaline Dunn

These days, almost everyone is feeling the pinch. According to recent research from the Food Standards Agency (FSA), more and more people view affording food as a concern and over three-quarters of UK consumers (76%) have voiced their unease.

Likewise, BritainThinks also found that the cost of living is now the dominant concern for UK households, with rising prices being a major concern for 90% of people. Shawbrook Bank even found that around 18% are already losing sleep over their concerns around money, and a quarter of those surveyed cited managing their finances as the primary cause of their stress.

At The Salary Calculator we understand how difficult it can be to cope with the cost of living crisis, and have compiled a list of ways to save money when faced with financial challenges:

• Access to food banks 
• Free sanitary products and contraceptives
• Baby food & formula
• Toys & Books

Access to food banks

Recent research has shown that over 22% of people surveyed by the FSA, as a result of financial struggles, have been forced to either miss a meal or reduce the size of their meals. It will come as little surprise then that people’s use of food banks has risen dramatically, with the number of those turning to food banks increasing from around one in 10 in March 2021, to almost one in six this March. 

Speaking about this, Prof Susan Jebb, chair of the agency, said: “In the face of the immediate pressures on people struggling to buy food, food banks are playing a vital role in our communities.” That said, you may be in the dark about how to go about accessing a food bank, but don’t worry, we’ll explain. To begin with, you’ll need a referral – you can start the ball rolling through accessing your local Citizens Advice. Once there, you’ll be asked about your personal circumstances and they will determine whether you’re eligible. That said, if you’re unable to get a referral this way, you can ask an organisation/body that you’re receiving support from, this could be a social worker, school staff, or GP.

Once you’ve received a referral, you’ll be given food vouchers for a food parcel containing three days’ worth of non-perishable food. Alongside the food parcel, you’ll also be offered advice on finance, debt, and government support. 

Sanitary products & contraceptives

Period poverty in the UK is alarmingly widespread. A recent survey in the UK uncovered that one in four girls and women aged 14-21 (28%) are struggling to afford sanitary products and almost one in five (19%) have been unable to afford these at all since the beginning of 2022.

With a lack of access to sanitary products, these women and girls have been forced to use substitutes such as ​​toilet paper (80%), socks (12%), newspaper/paper (10%), or another kind of fabric (7%). 

Commenting about the horrific situation many women and girls are facing, Rose Caldwell, CEO of Plan International UK, called the findings “devastating.” She said: “As we look to an uncertain future, many more families will face tough financial choices, and more young women than ever are likely to face issues affording the products they need,” she said. “Period products are a necessity, not a luxury, and they need to be treated as such.”

However, while we wait to catch up with Scotland, which is now the first in the world to have made period products free, there is assistance for those facing period poverty. Food banks now stock sanitary products, and you can find your local food bank through the Trussell Trust website which contains a directory of nationwide food banks. In some cases, you won’t need a referral. The supermarket Morrisons has a scheme where those in need can get free sanitary products by asking for a package for Sandy. Bloody Good Period, Period Poverty, Freedom4Girls and Hey Girls can also provide help.

When it comes to contraceptives, you can access them for free from the following: 

• Contraception clinics
• Sexual health or GUM (genitourinary medicine) clinics
• Some GP surgeries
• Some young people’s services
• Pharmacies

It’s also important to note that contraception services are free and confidential, even for those who are under the age of 16.

Baby food & formula

If you’re facing financial hardship and you are pregnant or have a child under four years of age, you may be eligible for assistance buying food and milk. This can be accessed through the NHS’s Healthy Start program,  where and if eligible, you will be sent a Healthy Start card with money on it, which is updated with funds every four weeks, so you can use it to buy:

• Plain cow’s milk
• Infant formula milk (based on cow’s milk)
• Healthy Start vitamins
• Vitamin drops 
• Fresh, frozen, and tinned fruit and vegetables
• Fresh, dried, and tinned pulses

There are also specialist “baby banks” which are run by local organisations and charities dotted across the UK. Through baby banks, you can access nappies, wipes, baby food, clothes, toiletries, toys, cots, sterilisers, baby baths, and medication. Some active baby banks include London-based organisation Little Village, Baby Basics, and The Nappy Project. 

To find out where your local baby bank is, reach out to Citizens Advice and Trussell Trust, or use Little Village’s interactive baby bank tool.

Toys & Books

While there are a fair few options available for food, drink and sanitary products, you may be wondering if there are organisations, charities, or schemes that can help you access toys and books for your youngsters. After all, a Gingerbread survey found that when looking to make cuts to spending, toys, books and games are often cut out first to make ends meet (52%).

When it comes to accessing books, BookTrust is the UK’s largest children’s reading charity, and entitles every child in England and Wales to a free Bookstart pack before they are 12 months old and again aged 3-4 years ( or 27 months old in Wales).

Likewise, for access to toys, you may find it helpful to look into toy libraries, which are exactly what you’d expect them to be, libraries where instead of borrowing books, children can borrow toys. There are more than 1,000 toy libraries around the UK, and yearly membership is low, costing as little as £3 per family for a year pass. Typically, toys can be borrowed for up to two to three weeks.

Tags: cost of living crisis, Economy, Finances, food banks, Personal finances