Nearly a couple of months in to 2016 now, and while it might seem like we’ve missed the boat for a ‘what’s in store’ blog, so much has happened, we’re glad we waited! A continuing oil price slump, massive uncertainty in stock markets around the world, the impending EU referendum and China still under big pressure to respond to growth concerns.
But, while the macro-economic picture is actually pretty bleak in many respects, with many commentators reading the signs as an impending global financial crisis, there are various things that are likely to affect the money in your pocket in a real sense in 2016. We’ll ignore investments for now, and focus on some of the more tangible things that are going to impact your cash.
Last year’s changes to savings accounts are happening now
Announced by George Osborne in last year’s budget, a new Personal Savings Allowance (PSA) is going to mean that around 95% of people won’t pay any tax on savings interest from 6 April 2016. Up until now, the standard advice on how to keep interest earnings away from the Taxman was to put it into an ISA, but the PSA has opened up the playing field, and it means that Cash ISAs may not necessarily be the right place for your money from an interest-earning perspective.
As with all changes like this, there are some quirks that will take some ironing out. For example, while every basic-rate tax payer has a PSA of £1,000, that doesn’t actually include the interest that you might receive from an already-stocked Cash ISA that you might own, so it might make sense to leave it where it is. The interest in your cash ISA is also protected year after year, so if you end up with a big savings pot, which would generate far more interest than your PSA allowance, you’d be much better off with your money in an ISA. A lot to think about…
The big energy companies are cutting prices
March sees both British Gas and EDF energy cutting their gas prices – the last of the big six energy suppliers to do so. All of them have dropped their prices by around 5%, which translates to around a £30 saving per year for most customers. It’s not a lot, but it’s something.
But the real money saving is in switching, so If you haven’t switched energy suppliers recently, it’s definitely worth looking into – first-time switchers are likely to save £100s. One approach that might be worth considering is using the power of collective bargaining to get a better rate. Groups like Martin Lewis’ Cheap Energy Club and Norwich Council’s Big Switch and Save allow consumers to come together and negotiate an energy tariff as a group, often leading to even better results. Plus, it takes the hassle out of all of the research.
It’s a bit cheaper to run your car…for a while
The cost of motoring in general always seems to be on the up, and if you’ve got your eye on a new car, it might be worth working out whether you’ll be better off buying it in 2016 or waiting until 2017 when the new road-tax bands come into play. If you’re buying something a little, um, sportier, then you might find a new first year road tax rate of up to £2,000 slapped onto the bill. Although, if you’re buying a zero emission car (because, the planet), you won’t have to worry too much.
Petrol prices dropped to below £1 a litre at supermarkets late last year, and they’re continuing to come down. In fact, according to the AA’s January fuel report, East Anglia has recorded the lowest non-supermarket price for unleaded, so it’s worth hunting around the petrol forecourts for the most competitive prices. But, oil prices have been rallying slightly, so it’s likely to be quite a rollercoaster in 2016. And of course, when the price of oil goes up a lot, the price of petrol goes up a lot. And when the price of oil goes down a lot, the price of petrol goes down a bit…
And one last one for the small business owners out there…
For most small business owners, a combination of minimal pay and dividends normally makes up their compensation in an effort to minimise both income tax and national insurance contributions. But from April, the dividend tax rate will be increased to 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers. This will likely mean a reassessment of the most effective way to pay yourself (and to pay for other business expenses) to make sure you’re still as tax efficient as possible.
So there you have it. You give a little, you get a little. If you have any questions about any of the above, or want to get into the finer details about your savings approach for 2016, just give us a call.
This article is for general use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
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