The Salary Calculator

Saving rates 

by Madaline Dunn

With so much chaos in the economic landscape, the pound yo-yoing, and the cost of living at its highest point for years, if you’ve managed to squirrel away some savings, it makes sense that you’d want to ensure that you’re getting the most out of your account.

Although the rising interest rates are unwelcome for many, for savers, after historically low-interest rates, it’s not all bad news; but savers need to watch out for the best deals.

In this article, we’ll walk you through the following:

• What saving is looking like during the cost of living crisis
• The saving rates rise
• Some of the best deals out there right now

Saving during the cost of living crisis

During the cost of living crisis a significant number of people have stopped paying into a savings account. According to a recent survey conducted by the Building Societies Association (BSA), 35% of those polled have stopped saving due to the rising cost of living, with 36% now relying on their savings to pay for day-to-day costs. Moreover, before the crisis, around one in 10 UK residents had no savings at all. However, millions of pounds are still in savings accounts and if you’re keeping your head above water and managing to save, you’ll likely be looking for the right account for you to secure the best deals.

Saving accounts come in a few different forms and typically are not subject to tax until you reach a certain threshold, this is called the personal savings allowance (PSA) and is dependent on what rate of income tax you pay. Basic rate taxpayers can earn £1,000 in interest each year without having to pay tax on that interest, for higher rate taxpayers this drops to £500. A basic rate tax payer who earned £1,200 in interest in would therefore only pay tax on the £200 above their PSA, which at 20% would be just £40 of tax on £1,200 of interest.

ISAs are comparable to a regular savings account, but whatever interest you earn remains entirely tax-free. However, ISAs tend to pay a lower rate of interest. For those looking for flexibility, an easy-access savings account can be a good option, as it allows you to dip into your savings at short notice without receiving penalties; likewise, the amount of money required to open an easy savings account is usually lower than other savings accounts. Fixed-rate savings accounts or bonds, on the other hand, while less flexible, offer you a guaranteed interest rate over a set period of time and typically offer higher interest rates.

A current account can be used as a savings account, although some basic accounts don’t offer interest on your balance. When looking into using a current account as a savings account, consider the interest rates and account requirements, as some will require you to pay a certain amount of money each month. Some current accounts can see interest rates exceed 5%, but this is often subject to a maximum sum you can save before it drops again.

Saving rates reach highest levels in over a decade

Savings rates in recent months have reached their highest levels in more than a decade. However, as Anna Bowes of independent comparison service Savings Champion says, things are changing so quickly, and she warned a week ago that people were “in danger of missing the peak.” Equally, research from BSA shows that many people aren’t sure what they’re getting with a savings account in the first place, with 31% of those with savings accounts never even checking their savings account interest rate.

Recent research on savings rates found that the average easy-access rates have risen from 0.25 to 1.05%, while since March, the average one-year deal has risen from 0.92 to 3.1%. However, banks and building societies have recently been pulling their savings accounts, Santander being one of them, withdrawing its best buy easy-access saving account two weeks ahead of schedule, and replacing it with a new issue paying a lower rate of 2%.

That said, a spokesperson for the Savings Guru, said that this withdrawal was not surprising and the likes of Skipton moving up to 2.55% is good news, and indicates that the market will consolidate around 2.25 to 2.5% on easy access. Likewise, the spokesperson said that the fixed rate changes that have been seen this week are unlikely to lead to a “full-blown market correction.”

The best saving rates right now

There is a wide range of saving rate deals currently available, and some are even breaking the 5% barrier. Below, we walk through a few of them.

The Barclays Rainy Day Saver account at the time of writing, was offering 5.12% interest on balances up to £5,000, after which this decreases to 0.15%. In a year, those with £5,000 saved will earn £250. There is, however, a £5 monthly membership fee, and you have to pay at least £800 each month. It also has some good rewards for those who are already Barclays customers. The Nationwide FlexDirect Current account is offering just below this at 5% on the first £1,500 saved, with no fees.

The Aldermore 1 Year Fixed Rate Cash ISA has also been highlighted as a good go-to, with 3.65% interest and a minimum deposit of £1000, with withdrawals subject to a deduction of 90 days’ interest.

With regard to fixed rates, those who choose this kind of savings account will be unable to access their money, typically for a period of at least three years, unless they pay a penalty fee. So, this won’t be a viable option for everyone. Investec Bank plc Raisin UK – 2 Year Fixed Term Deposit is currently offering a 4.61% rate for savings between £1,000 and £85,000, but the highest rate on the market is offered by Gatehouse bank, which has a five-year deal that pays 5.1%.

For more information on the best saving rates, check out MoneyFacts or MoneySupermarket. 

Tags: cost of living crisis, interest, interest rates, ISAs, savings

Cryptocurrency: how to report and pay the right amount of tax

by Admin

Article by GoSimpleTax

In October 2021, HMRC was reportedly planning to send out “nudge letters” to holders of cryptocurrency (also called cryptoassets or just crypto), reminding them to check that they were reporting correctly and paying the required amount of tax.

Obviously, HMRC wants to prevent tax underpayment by the 2.3m people in the UK now believed to have crypto holdings. You may be among them and want to be sure that you’re reporting properly and paying the right amount of tax. Or you could be thinking about investing in cryptocurrency and want to know what your obligations would be regarding reporting and paying tax.

This guide explains:

• What cryptoassets and cryptocurrency are.
• When cryptocurrency is subject to Capital Gains Tax.
• When cryptocurrency is subject to Income Tax.
• What records you need to keep for tax purposes.
• How to report crypto gains or income.

What are cryptoassets/cryptocurrency?

HMRC defines cryptocurrency/cryptoassets as: “Cryptographically secured digital representations of value or contractual rights that can be transferred, stored and traded electronically.”

Chances are you’ve heard of Bitcoin, the world’s best-known and most widely held cryptocurrency. More than 60% of UK cryptocurrency investors have Bitcoin holdings, but other examples include Ether, Litecoin and Ripple.

Cryptocurrencies are digital assets, they’re not physical currency. You can’t buy things in the shops with them and they have no inherent value, they’re worth whatever someone is willing to pay for them. A cryptotoken is a denomination of a particular cryptocurrency and they each have different values. As with other assets, cryptocurrency value can go up or down.

Cryptocurrency is bought and sold via secure peer-to-peer online networks or exchanges. According to HMRC, the tax treatment of cryptocurrency depends on its nature and use. Basically, if you’re given crypto or earn income from crypto trading, it can be subject to Income Tax. If you dispose of crypto by selling, exchanging or giving it away, it can be subject to Capital Gains Tax.

When is cryptocurrency subject to Capital Gains Tax?

Obviously, people invest in cryptocurrency hoping that its value will increase over time. If it does, you make a gain, that’s why Capital Gains Tax can be payable if you dispose of cryptocurrency tokens by:

• selling them
• exchanging them for other cryptoassets
• using them to pay for good or services
• giving them away (unless it’s to your spouse or partner) or
• donating them to charity.

Your gain is the difference between how much you bought the crypto for (including any transaction fees) and sold it for. If someone gives you cryptocurrency tokens upon which you later need to pay tax, to work out your gain, you must find out their market value when they became yours.

How much Capital Gains Tax is payable on cryptocurrency?

After your total taxable gains go over the Capital Gains Tax tax-free allowance threshold – £12,300 for the 2021-22 tax year – you’ll be taxed as follows:

• If you’re a basic rate Income Tax payer (ie with taxable earnings of £12,571-£50,270 a year) you’ll pay Capital Gains Tax of 10%, then  20% on gains that take you above £50,270 in taxable earnings.
• If you’re a higher or additional rate Income Tax payer (ie with taxable earnings of more than £50,270 a year) you’ll pay 20% CGT on your crypto gains over and above the CGT threshold.

To find out whether Capital Gains Tax is payable after selling cryptocurrency, you need to calculate your gain for each transaction.

Some allowable expenses are deductable for Capital Gains Tax, including (according to HMRC):

• “transaction fees paid before the transaction is added to a blockchain”
• “advertising for a buyer or seller”
• “drawing up a contract for the transaction”
• “making a valuation so you can work out your gain for that transaction”
• “a proportion of the pooled cost of your tokens when working out your gain”.

Need to know!

• Capital Gains Tax is obviously not due on crypto losses, but you can use these to reduce other crypto gains and any tax liability, providing you first report them to HMRC. Losses aren’t capped.

How to report and pay Capital Gains Tax on cryptocurrency

To report and pay Capital Gains Tax on cryptocurrency you can either complete a Self Assessment tax return following the end of the tax year or use the real-time Capital Gains Tax service to report and pay straight away.

You must keep separate records for each cryptocurrency transaction detailing:

• token type
• disposal date
• number of tokens disposed of
• tokens remaining
• value of the tokens in pound sterling
• bank statements and wallet addresses
• pooled costs before and after you disposed of them.

Need to know!

• HMRC can ask to inspect your cryptocurrency records if it decides to carry out a compliance

When is Income Tax rather than CGT payable on cryptocurrency?

Income Tax and National Insurance contributions (NICs) can be payable on cryptocurrency if your employer gives you them as a non-cash bonus or benefit (this could apply to those who mix employment with self-employment). If you need to pay Income Tax on income from crypto for this or other reasons, you’ll need to register for Self Assessment, if you’re not already registered.

If you occasionally dabble in crypto, you’ll probably only have to pay Capital Gains Tax on disposal. However, if you trade regularly, HMRC will consider you to be a crypto trader and you’ll need to report your income via Self Assessment and pay any Income Tax and National Insurance that’s due.

If you’ve paid Income Tax on crypto, Capital Gains Tax isn’t payable unless you later dispose of your tokens, when CGT will be due on the gain made since you reported for Income Tax.

Many cryptoassets are traded on exchanges that don’t use pounds sterling. If so, the value of any gain or loss must be converted into pounds sterling when you’re completing your Self-Assessment tax return. You’ll need to use supplementary page SA108 to detail crypto capital gains/income and losses claimed within your SA100 tax return.

Need to know!

• Fail to report cryptocurrency gains or income to HMRC and it can lead to penalties, while you’ll still have to pay tax you owe plus interest.

More information

Visit government website GOV.uk to download HMRC’s Cryptoassets Manual. It sets out the tax rules for both individuals and businesses that invest in cryptocurrency.

About GoSimpleTax

Income, Expenses and tax submission all in one.

GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.

The software submits directly to HMRC and is the solution for the self-employed, sole traders and anyone with income outside of PAYE to file their self-assessment giving hints and tips on savings along the way.

GoSimpleTax does all the calculations for you saving you ££’s on accountancy fees. Available on desktop or mobile application.

Tags: capital gains, capital gains tax, cryptocurrency, investment, savings

A guide to house prices across the UK

by Madaline Dunn

House hunting is exciting and often symbolises a new start, and adventure. That said, it can be somewhat overwhelming reviewing house prices, especially considering that global house prices are rising at the fastest pace since 2005.

According to Halifax, house prices shot up by 10.3% over the last year, with an increase to £287,440 on average!

But, don’t worry, at The Salary Calculator, we’ll walk you through:

• Some of the housing market trends right now
• Whether now is a good time to buy a house
• Where the cheapest house prices are
• Where the most expensive house prices are located

What are some of the housing market trends right now?

For those looking to break into the housing market in the UK, there are a few things you should know. In August, house prices jumped 7.1%, a record high, with more demand for greater space and a trend towards more home-working pinned as the reasons behind increased buyer activity.

In relation to this, following the pandemic, more and more people are looking to move out of cities, and now there is reportedly greater demand for rural areas. A survey from Royal London revealed that when movers were asked about their ideal living locations, 46% of Londoners said rural areas, while this figure was 45% in Manchester and 42% in Liverpool.

Andrew Asaam of Halifax said: “It’s clear from speaking to our mortgage customers that many have prioritised space over location as a result of more time spent at home over the last year and a half. We’ve seen evidence of this in areas right across Britain, with house price growth in the vast majority of cities now being outstripped by increases in their surrounding areas.”

Is now a good time to buy?

According to the experts, house prices are pretty pricey right now, and there’s been a month-on-month increase in price. Nationwide House Price Index found that in August 2021, the average house price stood at £248,857, which was 2.1% higher than in July. Demand is also high, meaning there’s a bit more competition.

Robert Gardner, Nationwide’s Chief Economist, says demand is likely to remain solid: “Consumer confidence has rebounded in recent months while borrowing costs remain low. This, combined with the lack of supply on the market, suggests continued support for house prices.”

Meanwhile, speaking to Woman and Home, Chris Salmon, a property expert said that a large price drop is unlikely to happen in the next few months: “For the most part, they will remain largely the same as they are now. Although the Stamp Duty Holiday fully ends at the end of September, only a small amount of properties are affected by that, not enough to see a significant drop in house prices.”

Where are the cheapest house prices?

If you look at the UK by region, some of the cheapest places to buy a house are:

• Scotland: Average house price: £206,359
• Yorkshire and The Humber: Average house price: £207,106
• North East: Average house price: £213,091
• North West: Average house price: £228,307
• East Midlands: Average house price: £250,946

Meanwhile, by city, some of the least cheapest spots to buy a house are:

• Hull: Average house price: £156,424
• Carlisle: Average house price: £163,232
• Bradford: Average house price: £164,410,
• Sunderland: Average house price: £179,567
• Inverness: Average house price:£191,840
• Glasgow: Average house price: £196,625

Where are the most expensive house prices?

In the UK, buying in some of the most expensive regions will cost you an arm and a leg. The South West is now the most expensive region, and experts have largely put this down to the second home market surging.

Across the UK, some of the most expensive regions include:

• South West: Average house price: £430,488
• East: Average house price: £385,420
• South East: Average house price: £441,246
• London: Average house price: £706,267
• West Midlands: Average house price: £264,017

These days there are actually locations in the UK that outdo London when it comes to house prices. Winchester, in particular, was found to be one of the most expensive places to live. There, the average property costs 14 times the average salary. Oxford is not far behind, with a price-to-earnings ratio of 12.4.

The following locations are the most expensive in the UK:

• Winchester: Average house price:£630,432
• St Albans: Average house price: £604,423
• London: Average house price: £564,695
• Oxford: Average house price: £486,928
• Cambridge: Average house price: £482,300

Tags: Economy, house prices, houses, savings

Social care tax proposed from April 2022

by Admin

The government announced yesterday plans to introduce new social care tax, intended to help reduce the costs incurred when a person goes into care. If the bill passes parliament, this will mean be an increase in National Insurance contributions of 1.25 percentage points from April 2022, to be replaced by a separate tax of the same amount from April 2023. The benefit of this additional tax, in England at least, is that care costs will be capped at £86,000 (less if you don’t have that much in savings / assets). Scotland, Wales and Northern Ireland set their own social care policies, but will receive additional revenue from the tax generated.

The plan has drawn criticism from many who see it is a tax paid by low- and middle-income employees to subsidise wealthy retirees. It also appears to be a break of a manifesto pledge not to raise income tax, National Insurance or VAT – the justification for which, put forward by the government, has been that the pandemic has changed things.

This BBC article has a clear summary of the changes in more detail, as well as a chart showing how much extra tax you’ll pay depending on how much you earn. The bill still needs to pass parliament, but when this and other changes from April 2022 are confirmed, The Salary Calculator will be updated with the latest rates so that you can see what a difference it will make to your take-home pay.

Tags: coronavirus, covid-19, HMRC, income tax, Jobs, national insurance, Pay As You Earn, social care, tax rates

The best credit card deals out there in 2021

by Madaline Dunn

When it comes to the world of credit cards, there are lots of benefits. A credit card helps boost your credit rating, offers you protection and freebies, and gives you some financial wriggle room.

That said, it can be hard to know where to start, and often people have lots of burning questions that need answering. It’s also important to stay informed about charges and fees.

At The Salary Calculator, we’ll make sure that you’re up-to-date with all the latest credit card deals out there in 2021. Keep reading to find out more.

Reasons you could benefit from a credit card

To some, credit cards can seem intimidating, and many believe it only leads to debt, but they can be helpful in some circumstances. Credit cards can help you with your finances and assist you with building a good credit report. If your credit is in the red, and you’re looking to make a big investment like a house or car, a credit card can push it into the green.

Some credit cards also enable free borrowing and purchase protection, as well as offering reward deals so that you can earn free money too.

That said, it’s important to be aware that you shouldn’t rely on credit cards to borrow money, especially if you don’t have the funds for repayments. Plus, when the interest-free period ends, you can be faced with some pretty significant charges. Credit cards also have varying levels of APR, which refers to the rate at which you’ll be charged for borrowing. So, make sure you don’t get caught out by the small print!

Santander All in One Credit Card

Arguably, the biggest plus of this credit card offer is that cardholders can benefit from 26 months interest-free on balance transfers. Other benefits include a 0.5% cashback on all purchases and no foreign transaction fees.

However, it’s not all sunshine and rainbows, and the card does have a £3 monthly charge, which works out to £36 a year. Another disadvantage of this card is that you will also be charged transaction fees if you withdraw money – interest applies here too. Moreover, it has an APR of 23.7%.

To be eligible for this card, you must have an income of at least £7,500 a year and be 18 or over.

Aqua Advance Credit Card

This card is excellent for people who are looking to build credit and requires no credit rating. It has an initial APR of 34.9%, but customers who stick with this card will be rewarded through staggered APR reduction. After 12 months, if you keep up with payments and stay within your limit, your rate could be reduced by 5% each year. This means that the APR can go as low as 19.9%.

This card also offers access to the Aqua Credit Checker, allowing you to view your credit rating and its improvement.

Other benefits include credit limits of between £250-£1,200 and no extra charges for purchasing abroad.

To be eligible for this card, you must fulfil a specific criterion. Applicants must be over 18 with a permanent address. Additionally, you must have a current UK bank or building society account and must not have been registered as bankrupt in the last 18 months. Equally, you cannot have any ongoing bankruptcy proceedings against you.

Finally, eligibility also depends on not receiving a County Court Judgement (CCJ) in the past 12 months. You also cannot already have an Aqua card or have an Aqua, marbles, opus, Fluid card taken out in the last 12 months.

American Express Platinum Cashback Everyday Credit Card 

This is a great card for those looking to get a little more bang for their buck with no annual fee. It offers a 5% cashback on all purchases up to £100 for the first three months. This does, however, decrease over time.

That said, it’s important to note that you need to spend £3000 or more to access cashback offers, and unfortunately, it’s not available for those with a bad credit history. It has an APR of 22.2%,

To be a successful applicant for this card, you must be aged 18 or over and have a clean slate regarding debt. Applicants must also have a permanent UK address and a current UK bank or building society account.

M&S Shopping Plus Credit Card

For those looking for a credit card to spread the cost of large purchases, this is the perfect one for you. With no annual fee, it also boasts a 20-month interest-free period of new purchases. That’s right, no interest at all for 20 months! Accompanying this, the card also offers cardholders an 18-month interest-free period for balance transfers. That said, this only applies within the first 90 days. Also, remember if you opt for this card, you must pay off your balance before the interest-free period ends.

As with everything, there are pros and cons to this card, and the reward points you earn through this card are only available in the form of M&S vouchers. So, this isn’t necessarily a great deal for everyone. It also has an APR of 21.9%.

Eligibility for this card requires that applicants are over the age of 18 and UK residents.

Barclaycard Rewards Credit Card

This is a great travel card for those who want to earn as they spend abroad. With a 0% foreign transaction fee and no annual fee, this is a pretty attractive deal. This card also offers 0.25% cashback on all spending and savings on live events with Barclaycard Entertainment.

However, compared with other credit cards, a 0.25% cashback rate isn’t the best deal and it does not offer a balance transfer option. It also has a 22.9% APR variable.

Applicants must be aged 21 or over, have a personal income of £20,000 or above, and have had a permanent UK address for at least two years. Those looking to get in on this deal must also have at least four years of managing credit, make payments on time and be able to afford repayments.

Lastly, applicants must not have had Individual Voluntary Agreements, CCJs, and must not have declared bankruptcy in the last six years.

Tags: 2021, Credit card, Economy, Personal finances, The Salary Calculator