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If the headlines have got you feeling concerned, you’re not alone. It’s been an incredibly difficult few years financially, and the knocks appear to keep coming. The Conservative government’s recent mini-budget has brought in a raft of changes and sent shock waves across markets. However, the implications for personal finances have stretched much further than simply tax cuts, with the pound crashing to a record low, with, what has been called “open revolt” in markets.

At The Salary Calculator, we understand that there is power in knowledge, and the best way to equip yourself for the changes ahead is to be informed. So, below, we’ll explore:

• The changes introduced by the mini-budget,
• How the budget will impact personal finances,
• What the mini-budget means for the value of the pound and living expenses,
• The government U-turn.

The mini-budget

During his emergency Budget speech on Friday, 23 September, the new Chancellor Kwasi Kwarteng introduced the mini-budget which brought in sweeping changes to income tax, National Insurance (NI), Universal Credit, Stamp Duty, and bankers bonuses.

For income tax, from April 2023, the basic rate of income tax will be cut by 1% (from 20% to 19%). Under former Chancellor Rishi Sunak, this was meant to come in the following year. In addition to this, Kwarteng announced that the additional rate of income tax, currently applicable to earnings above $150,000, would also been scrapped, meaning that the highest earners would pay the 40% tax rate on their earnings, rather than 45% (more on that later).

According to the Treasury, these changes will result in 31 million people being better off by an average of £170 per year. However, an analysis from the thinktank The Resolution Foundation at the time of the announcement outlined that “only the very richest households in Britain” would see their incomes grow as a result of the tax changes, with the wealthiest 5% to see their incomes grow by 2% next year (2023/24).

With regards to NI, from 6 November, employers and employees will pay 1.25 percentage points less in NI. This will result in employees paying NI at 12% on earnings between £12,570 and £50,270 and 2% on anything above. Employer rates, on the other hand, will revert to 13.80%.

For those on Universal Credit, in a move that Kwarteng said would “get Britain working again,” rules will get tighter. Set to come into effect in January 2023, the new rules will impact 120,000 claimants, who will be asked to “take active steps” to increase their working hours or find better-paid jobs or have their benefits reduced.

As interest rates on mortgages are projected to reach 6%, the Chancellor has also scrapped Stamp Duty. As a result, you won’t pay any stamp duty on the first £250,000 of a property. The Treasury has outlined that 200,000 more people every year will be able to buy a home without paying any stamp duty; first-time buyers will now pay no stamp duty up to £425,000 (up from £300,000). Some have voiced concerns that this will lead to further hikes in house prices, much like when Sunak announced the Stamp Duty holiday.

In a surprising move the Chancellor has also made strides toward deregulation of London’s financial industry to “boost growth.” This has come, in part, in the form of Kwarteng scrapping the banker bonus cap. Explaining this decision, the Chancellor said: “We need global banks to create jobs here, invest here and pay taxes here in London, not in Paris, not in Frankfurt and not in New York.” Unite, on the other hand, called the move an “insult to workers,” while Positive Money, a non-profit research and campaigning organisation, called it “shameful.”

The value of the pound and its effect on day-to-day living expenses

The currency markets have reacted to Kwarteng’s mini-budget with volatility, and subsequently, the pound has plummeted. At a record low, on Monday, 26 September, the pound was worth $1.0327 against the dollar. The pound also dropped sharply when the Bank of England was forced to intervene over what was being called a “material risk” to the UK economy.

But what does this mean for consumers? Well, unfortunately, it’s not good. With the pound so weak against competing currencies, the price of imports will be much higher. This is especially bad news considering that when it comes to food self-sufficiency, overall, the UK imports more than 50% of its food, with supermarkets specifically relying on imports for 40% of their food stock, meaning that the price of groceries is set to increase yet again. Moreover, regarding travelling via car, according to the AA, a weak pound means that filling up a family car could cost an extra £7.50, and that’s not taking into consideration the fact the fuel prices are already at an all-time high.

The struggling pound will also have a staggering impact on mortgages. On Monday, the financial markets forecast that the base rate could nearly treble to 6% next year. Likewise, those on variable rates (2.2 million) will immediately feel the effect of raised interest rates.

The 45p rate U-turn

In the wake of serious backlash over plans to scrap the 45p rate for those earning over £150,000 a year during a time of rising living costs, the government has announced a U-turn. This U-turn also comes following the circulation of reports that new Chancellor Kwasi Kwarteng met with hedge fund managers for a champagne reception just after his mini-Budget.

In terms of what the U-turn means for the pound, those from the financial sector have warned that while sterling has performed better, a lot of questions still remain, considering that the 45 pence tax rate was only a small part of the unfunded tax cuts announced. As Jane Foley, head of FX Strategy, Rabobank, London, said: “UK assets, the pound and gilts are not out of the woods yet, and the British government has a lot to do to get back credibility.”

Moreover, while the U-turn seemed to bolster the pound, with sterling jumping as much as 1pc in early trading amid reports, it fell back to around $1.12 following the Chancellor stating he wouldn’t resign.

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.

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.

When each day the headlines regarding the economy are worse than the last, warnings of skyrocketing energy prices, excessive food and petrol costs, and forecasts that it’s only going to get worse, you may be counting every penny. Investing is likely to be the last thing on your mind when juggling your finances in this challenging financial crisis.

That’s what the research shows, too. According to one study, 24% have stopped contributing to investments and savings because of the cost of living crisis. Meanwhile, 14.1% of British households don’t hold any investment, even though most have at least six months’ worth of “essential spending cash.”

That said, experts say that it’s perhaps not the best plan to abandon ship and that continuing to invest might actually benefit you in the long run.

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

• Whether not you should continue investing during the cost of living crisis
• What are the risks and how can you safeguard yourself
• How you should invest

Should you invest?

People are indeed becoming more cautious around investment, however, Becky O’Connor, head of pensions and savings at Interactive Investor says some are still making regular contributions. However, O’Connor explained that it’s “understandable” that people are more reluctant to part ways with their money and expose it to risk, “given the current outlook for household budgets” that people are “looking to make cutbacks wherever they can.”

As a result, research from Scottish Friendly reveals that investment levels have fallen to their lowest in three years in the second quarter of the year. This figure stands alongside the total value of new adult investment ISA policies, which has dropped 6%.

Explaining the reason for this decline, Simon Phillips, an independent financial adviser and partner at Devon-based Continuum, said: “Cash is not making anything due to inflation, but many people tend to think that if the economy is struggling or the stockmarket is volatile, that they should cut back on stocks and shares and keep money safe in cash.” However, Phillips argues that from a financial point of view, that approach is the “worst thing you can do” because it means you will miss out on investing at “what could be a good time from an equity standpoint.”

Sarah Coles echoes similar sentiments when discussing future savings:: “If you do cut back on saving for the future when money is tight, it’s worth considering when you’ll be able to bump contributions back up. A few months away from a pension isn’t going to make a dramatic difference to your retirement, but if it drags on and you don’t have a plan for beefing payments up again when your finances ease, then you could end up with a horrible surprise in retirement.”

According to the experts, if you have built up a robust emergency fund to ensure that you have security when the hard times come, it could be beneficial for you to explore investment.

What are the risks and how should you safeguard yourself?

One of the main barriers to people diving into the world of investment is that many don’t feel confident exploring that space. For many, there’s the misconception that investment is only for people with lots of money. This perhaps explains why 46% of people don’t feel confident when it comes to investing.

It is certainly true that investment comes with risks. After all, if the stock markets blossom, so will the value of your investment, and vice versa, if the markets crash, your investments could take a hit. Not all investments are created equal though, and some pose more risks than others. According to the experts, government bonds are considered less risky, but will return less profit, meanwhile, shares are riskier, as are trusts and cryptocurrency, the latter of which is becoming increasingly popular, but also incredibly volatile.

When it comes to minimising risk, diversification is an essential component, while Barclays recommends investing globally to get access to a range of economies. It’s also suggested that when thinking about investment, you consider the long-term implications and you only invest funds you don’t need across the next five years. It’s also important that you review your investment portfolio regularly to make sure that you’re meeting your goals and not exposing yourself to risk.

Tips for how you should invest?

When considering investing, it’s important that you put the research in, and make sure you pick the right options for you, your financial situation, and take into account the level of risk you are willing to expose yourself to.

In a cost of living crisis, some recommend that investing in defensive stocks, which include “essential goods and services,” can be a good option, as they often outperform the market, when there are financially difficult times. Likewise, dividend stocks can also generate funds quickly.

Guidance from finance experts also suggests that you should drip-feed your money into investments, which can reportedly help you benefit from pound-cost averaging. It’s also important to note that when the economy looks grim, you are also more likely to be able to buy low-priced stocks.

As millions of people prepare to jet off for their summer holidays – for some, for the first time in three years- many are troubled by travel anxiety. Strike action at UK airports has been ongoing for some time now, over pay, working conditions and long hours. For these reasons, there has also been an exodus from the sector, leading to staff shortages. On top of these issues, the recent heatwave has added to disruptions, with all-time-high temperatures causing surface defects on runways.

Projections from experts such as Professor Cloke, a Government scientific advisor are also warning that there could be a further heatwave in August, and so it’s wise to prepare for this eventuality when booking upcoming flights. Likewise, while British Airways staff recently announced they had called off their strike after reaching a pay deal, Ryanair staff are set to continue with strike action, as are staff from other airlines.

It can be difficult to know where you stand with regard to compensation and insurance, which can result in a lot of unnecessary stress.

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

• Whether the situation has changed since the UK left the EU
• What happens if your flight is cancelled due to strike action
• Whether or not you’re entitled to compensation if your flight is delayed or cancelled
• Whether you’ll be covered by travel insurance
• What will happen if your flight is cancelled due to the heatwave

Is the situation any different now that the UK has left the European Union?

Prior to Brexit, EU 261/2004 protected the rights of air passengers, and it meant that people could claim compensation for a delayed or a cancelled flight. While the UK is no longer part of the EU, that protection was incorporated into UK law at the end of the Brexit transition period.

This is good news because it means that you’re still protected with regard to flight compensation claims, but now you’ll be paid in UK Pounds rather than Euros.

What happens if your flight is cancelled due to strike action?

Flight cancellations are usually a nightmare to navigate and the last thing you want to encounter when envisioning the expanse of blue sea that awaits you at your holiday destination. However, the good news is that if your flight is cancelled as a result of strike action, legally, your airline is responsible for rerouting you, which could even be with another airline if the airline you booked with is unable to accommodate you. The airline will refund you for the flight cancellation if this option is also not possible.

It’s also important to note that in situations where your cancelled flight is part of a holiday package, you’ll be covered by ATOL. This is a government-backed financial protection scheme that applies to the majority of package holidays. As part of this coverage, if your flight cancellation means you have to locate alternative accommodation, you’ll be covered for this too.

Will you receive compensation?

Under UK law, if you’re due to fly and your flight is cancelled and the airline company you booked with fails to inform you of the cancellation less than 14 days from the date you’re due to fly, you will be entitled to compensation, if the cancellation is the airline’s fault.

That said, if the strike is announced more than two weeks from the date of your holiday and you’re offered an acceptable alternative that doesn’t detract too much from your original flying plans, your entitlement to compensation no longer remains. Adding to this, Julia Lo Bue-Said, chief executive of Advantage Travel Partnership, said: “Equally, if you decide not to travel because you are concerned by strikes, you won’t be covered in this instance either.”

Are you covered by insurance?

Unfortunately, a significant number of insurance policies don’t offer protection in cases of strike action. According to a recent investigation by Which?, four in 10 policies don’t. So, considering the very turbulent nature of travel at the moment, when deciding which insurance provider to choose, it’s important to ensure that they provide as robust coverage as possible.

Likewise, be aware that if, following the news of upcoming strikes, you book travel insurance, you might find that it’s invalidated.

Speaking about this to This is Money, Ceri McMillan, travel expert at GoCompare, ​​said: “It’s so important that you read your policy, so you know what you’re covered for and likewise, buy your policy as soon as you book your holiday as you are more likely to be covered the earlier you bought it.”

What happens if your flight is cancelled due to the heatwave?

Due to the Civil Aviation Authority declaring that the heatwave lies within the category of ‘extraordinary circumstances,’ if a flight is cancelled or delayed due to soaring temperatures, passengers will not be eligible for compensation, which typically works out as up to £500 per person.

Extraordinary circumstances cover situations that airlines deem to be out of their control, and unforseen. Other examples of situations in this category, include: political and civil unrest, security threats, medical emergencies, strikes of airport staff or suppliers, and bird strikes.