The Salary Calculator

2023 Autumn Statement – changes to National Insurance

by Admin

Chancellor Jeremy Hunt has given his Autumn Statement today, including a number of changes to National Insurance contributions for both employees and for the self-employed.

The standard rate of NI for employees (Class 1) will be reduced with effect from 6th January 2024 (i.e., before the start of the next tax year on 6th April), from its current 12% to a lower 10%. This rate of NI is paid by employees earning more than £12,570. The rate you pay on earnings over £50,270 will remain at 2%.  This change could save employees up to £754 per year.

The self-employed will also benefit from 6th April, with their (Class 4) NI rate being reduced from 9% to 8%, and Class 2 NI (£3.45 per week) being abolished.

If you’d like to see how much of a difference the NI change will make to your payslip from January, The Salary Calculator has been updated with the new NI rates, which are displayed in the results table in an extra “From January 2024” line. I hope that you find it helpful!

Tags: 2023, 2024, national insurance, National Insurance

A rundown of the best budgeting apps 

by Madaline Dunn

As we enter a new financial year, it’s always worth doing a spring clean of your finances to see where you’re at, plan ahead, and save – if that’s on your agenda. This is where budgeting apps come in. These days, there are so many to choose from, with each offering a range of different features perfect for accommodating people’s varying needs.

This week, at The Salary Calculator, we’ll walk you through the following:

• How to find the best budgeting app for you,
• How a budgeting app can benefit you,
• Some of the best apps on the market right now.

How to evaluate which is the best budgeting app for you

When you’re determining the best budgeting app for you, there are a number of factors that you’ll want to consider; for example, first and foremost, it’s important to check that the app is available on your device – so check whether it’s available on App Store (for iOS) or Google Play (for Android).

Another consideration is whether or not the app is free, or offers a free trial. Luckily, the majority of the best apps on the market are entirely free and offer a wide range of features. However, there are apps that are tiered and only offer users certain features based on their subscription level.

An incredibly important feature of an app, especially when you’re providing personal information and, in some cases, access and syncing to your bank accounts, is security. In such situations, assurance that your data is protected is of utmost importance. Check to see if the app is FCA regulated, whether there’s multi-factor authentication to prove your identity, and encryption.

Customisability is also a key consideration, and having the option to make a budgeting app work for you, and add your own spending, budgeting, and saving categories can really help you get in control of your finances.

How can budgeting apps benefit you?

Budgeting has a whole raft of benefits, including giving you insight into your spending habits. This is especially true with apps that have a more visual element and include graphs and charts. Seeing this data organised into clear categories can really help break down the numbers.

Once you have a snapshot of your spending habits, this can give you the power to identify areas where you could be overspending and, subsequently, help you create a savings plan. Savings plans can have a wide range of different applications, whether it’s wanting to save for a holiday, a new course, or even more long-term goals, like saving for the deposit on your first house, or creating a retirement fund.

Another element of this could be creating an emergency fund, which can act as a parachute when facing financially difficult times.

What are some of the best budgeting apps?

Below, we’ll walk you through some of the best budgeting apps on offer.

Money Dashboard – This app is award-winning and stole the title of ‘best personal finance app” in 2017, 2018, 2020 and 2021. It allows you to categorise your transactions automatically and is also highly customisable and comprehensive. Another plus is that it is very visual, with graphs and charts that help break down your income and expenditure easily. It also has an income and expenditure prediction function and is totally free with no premium features.

Some of the drawbacks are that it’s not the easiest budgeting app to set up, and it takes a fair bit of input to personalise and categorise.

Plum – Plum is similar to Money Dashboard, but instead utilises its AI function to calculate how much you can afford to save, based on your previous spending habits. Further to this, based on its analysis of your data, it also makes recommendations for how to save.

It does, however, have tiered membership, all offering different features, which are as follows:

• Plum Basic – free
• Plum Plus – £2.99 a month
• Plum Pro – £4.99 a month
• Plum Premium – £9.99 a month

With all premium tiers, customers also have the option of a free 30-day trial.

It’s also important to note that there are different pockets where you keep your funds. The primary pocket offers instant access to your funds but does not pay any interest and is also not protected by the Financial Services Compensation Scheme (FSCS). Easy Access pockets are FSCS protected, but also require you to give one day’s notice for withdrawal of funds and pay interest. With premium accounts, you can also access higher interest.

Hyperjar – This app is often highlighted as a go-to for couples and families and is a budgeting app with a twist. With this app, you use a prepaid card, which you load your money onto. From there, via the app, you assign money to different jars which you label. A useful feature is that you can even auto-link shops to the jars and use those jars to pay when you visit a particular store.

When abroad, you can use this for purchasing goods and services with no foreign transaction fees applied.

Any money that you load onto your cards is managed by Modulr FS Limited, an authorised Electronic Money Institution which is regulated by the Financial Conduct Authority, but your money is not covered by the FSCS. Another drawback is that you can’t make ATM withdrawals with this app.

Cleo – Cleo targets the younger generation and has been dubbed the Gen Z super app. It’s a money management app that uses an AI chatbot as a financial assistant. It tracks your spending patterns, helps you manage your budget, and recommends amounts to save in your Cleo Wallet.

Unlike some of the other apps on our list, it’s simple and straightforward to set up; that said, the free version of the app is considerably more limited than some of the other free apps on our list.

Its premium versions include:

• Cleo+ which costs £5.99 and comes with an overdraft service that’s interest-free and must be paid back within 3 to 28 days and also offers cashback.
• Cleo Builder, on the other hand, is a much pricier version, at £14.99 per month, and primarily functions to improve your credit score.

Emma – Like some of the other apps we’ve listed, Emma uses open banking to connect and combine all your bank accounts, investments and credit cards. This means that you can get a snapshot of all your spending in one place. One of the key free features of Emma is that it allows you to identify all of your different subscriptions, even the ones that you’ve forgotten about.

You can also enter your payday date and set a monthly budget and it offers a fee tracker and savings advice. This is another app which is easy to set up and navigate, which is a huge plus for those who don’t feel particularly tech-savvy, but there are some drawbacks. The Emma app doesn’t work with all banks, for example; compatible banks include:

• American Express,
• Barclays,
• First Direct,
• Lloyds,
• Nationwide,
• NatWest,
• TSB,
• Revolut,
• Starling Bank,
• Monzo.

Additionally, the app doesn’t offer users a day-by-day or month-by-month comparison, so it isn’t as comprehensive as other apps.

Likewise, as with some of the other apps on our list, you won’t be able to access some of the features without premium subscriptions:

• Emma Basic is free,
• Emma Plus is £4.99 per month,
• Emma Pro is £9.99 per month,
• Emma Ultimate is £14.99 per month.

Tags: 2023, apps, budgetting, Personal finances, savings

The new budget and how it will affect personal finances 

by Madaline Dunn

The new budget was announced as the country faces widespread industrial action, the continued cost of living crisis and record inflation. The first big budget since Kwasi Kwarteng’s budget under Liz Truss tanked the economy, it comes while the country faces the biggest ever fall in living standards. Moreover, projections are that the country’s tax burden is to reach a new post-war record.

You’ll likely have heard that this Spring Budget has some good and some bad parts, so at The Salary Calculator, we’ll guide you through what you need to know and how you’ll be affected. We’ll walk you through the following:

• The budget highlights
• Pension pot changes
• How your take-home pay will likely be affected

Budget highlights

While this Spring budget sent fewer shockwaves across the UK (and the world) in comparison to the last, there are a number of budget highlights to take note of.

The planned rise to the Energy Price Guarantee (EPG) has been delayed, which means that it will remain at its current level for another three months; this means that the average household bill will stay at around £2,500 a year. Further to this, prepayment energy meter bills will be aligned with direct debit, leading to savings of around £45 a year for prepayment customers.

Further, the freeze on income tax and national insurance thresholds has been extended until April 2028. This means that the income tax personal allowance will stay at £12,570 until April 2028. The threshold for top-rate taxpayers of 45% will also fall from £150,000 to £125,140.

Childcare support was another key highlight in the budget. Currently, according to the OECD, the UK has the most expensive childcare costs than anywhere else in the economically developed world; so these new measures are long overdue.

There will be a phased introduction of this enhanced childcare support, as follows:

• From April 2024, working parents with children two and over will be given 15 free hours a week.
• From September 2024, these 15 hours will be extended to all children over nine months old and be introduced from maternity leave’s end.
• From September 2025, those who are eligible with children under the age of five will be provided with 30 hours of free childcare.

In addition, there will be a change in how support is delivered to those on the lowest incomes. For those using the Universal Credit system, childcare costs will be received upfront. That being said, the childcare support changes have not been without criticism. For example,

Child Poverty Action Group’s Chief Executive Alison Garnham outlined that the stringent job-search requirements for parents on universal credit (UC) are “concerning.”

In April, the National Living Wage will rise to £10.42 per hour from £9.50 for over 23-year-olds. Meanwhile, for those:

• Aged 21 to 22 years, it will rise to £10.18,
• Aged between 18 and 20, it will increase to £7.49,
• Aged 16 to 17 and apprentices, it will rise to £5.28.

Additionally, further to Hunt allocating local authorities the power to charge more Council Tax without holding a referendum (5%), from 1 April, 2023, millions will be faced with the biggest council tax hike ever, with three in four councils increasing council tax by the maximum amount allowed.

For consumers, it’s also worth noting that there will be a 10.1 per cent rise in alcohol duty rates in line with the Retail Price Index (RPI), which means that a bottle of wine could increase by 44p. However, due to the Draught Relief scheme, the tax on draught beers will remain the same from 1 August. Duty rate on all tobacco products will rise by 2 per cent above RPI inflation, too. Hand-rolled cigarettes, specifically, will see an additional 6 per cent rise above RPI.

Pension pot changes

The budget detailed significant changes to pensions. The annual pension allowance (how much you can pay into your pension and get tax relief) was originally £40,000 or your total earnings, whichever was lower, however from 6 April 2023, it will be a maximum of £60,000.

Additionally, while the lifetime allowance (the total amount you can pay into your pension during your lifetime) is currently £1,073,100 and was intended to stay this way until 2026, in the budget, it was announced that the lifetime allowance will be removed completely from 6 April 2023.

How will your take-home pay be affected?

Everyone’s take-home pay will be affected by the budget announcement differently depending on their earnings, whether or not they have children, are retired, or have student loans.

For example, because the tax brackets have been frozen and are not adjusting to keep pace with inflation, experts say that both basic and higher taxpayers will face what economists call “fiscal drag”. The Office for Budget Responsibility estimates that this will create an additional 3.2 million new taxpayers, with 2.6 million more people paying the higher rate of tax.

Further, changes to student loans mean that the Student loan repayment threshold will drop from £27,295 to £25,000 for those starting courses in September 2023. The thresholds are as follows:

• If you’re on a Plan 1 student loan (you started your course before 2012), you’ll begin repaying when your income is over £22,015 a year,
• If you have a Plan 2 student loan (you started your course between 1 September 2012 and 31 July 2023), you’ll start repayments at £27,295 a year,
• If you’re on a Plan 4 student loan (you’re a Scottish student who started your course anywhere in the UK on or after 1 September 1998), you’ll only repay once your income has exceeded £27,660 a year,
• Those on a Plan 5 student loan (you started your course on or after 1 August 2023), will start repaying their loan when their income goes over £25,000 a year,
• For those on a Postgraduate Loan repayment plan (a Master’s Loan or a Doctoral Loan), repayments begin at £21,000 a year (before tax and other deductions).

If you’re on Plans 1, 2, 4 or 5, and your income exceeds the threshold, you’ll start repayments at a rate of 9%, and 6% if you’re on a Postgraduate Loan plan.

At The Salary Calculator, we know that working out what you owe can be a bit of a head-scratcher, so we’ve simplified things with our updated Take-Home tax calculator. To get a breakdown of how you’ll be affected by the budget, head over here.

Tags: 2023, budget, childcare, Pensions, student loan