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Wales Online
5 days ago
- Business
- Wales Online
People with 'modest' savings could miss out on £300 DWP Winter Fuel Payment under new rules
People with 'modest' savings could miss out on £300 DWP Winter Fuel Payment under new rules The Department for Work and Pensions is set to deny thousands the support with experts warning of several factors you should be aware of State pensioners could lose out on £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings (Image: WalesOnline/Rob Browne ) State pensioners could lose out on £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings. Following a recently-announced Labour Party government reversal, DWP Winter Fuel Allowances will be sent out to nine million pensioners later this year. However, Coventry Building Society has issued a warning that numerous state pensioners might inadvertently surpass the new £35,000 limit. For the best money-saving tips straight to your inbox, sign up to our Money newsletter here Interest accrued on standard savings accounts is deemed taxable income and contributes towards the threshold, even if it's within the Personal Savings Allowance and remains untaxed. For individuals nearing the £35,000 threshold already, additional income from savings could tip them over the edge. Jeremy Cox, head of Strategy at Coventry Building Society, cautioned that "thousands could still unknowingly be left out in the cold - not because they're earning more, but because their savings are." He pointed out that "many pensioners may not realise that interest earned on savings held outside of ISAs count towards their total taxable income." Article continues below He added: "With interest rates still relatively high, even modest savings can generate income that pushes someone over the threshold," reports Birmingham Live. He advised: "ISAs offer a tax-free way to keep savings interest out of the income equation. Interest earned within an ISA is never taxed and does not count toward income calculations". Financial advisers speaking to The Telegraph emphasised that those slightly above the £35,000 threshold could engage in minor behavioural tweaks to enjoy a financial uplift this coming winter. Alice Haine, from investment service Bestinvest, referred to the updated limit, saying: "It's effectively another tax cliff-edge." "Paying attention to what constitutes as income may become very important for those whose incomes hover around the £35,000 mark, as a minor adjustment could be the difference between receiving the payment or handing it back through tax," Ms Haine said. Sir Steve Webb, ex-pensions minister and partner at pension consultancy LCP, said: "The Government's own figures clearly suggest that they expect the number of losers from the new policy to rise each year. Article continues below "With around two million pensioners currently over the £35,000 threshold, this number could easily rise by another half a million by 2030. "This could end up being another way in which governments use inflation to quietly raise additional revenue year-by-year."
Daily Mirror
6 days ago
- Business
- Daily Mirror
Pensioners with just 'modest savings' to be denied £300 Winter Fuel Payment
A alert has been issued for nine million state pensioners who could still lose £300 Winter Fuel Payments from the Department for Work and Pensions - experts have explained all Thousands of state pensioners may be at risk of losing their £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings, a building society has warned. Following a government U-turn, the Winter Fuel Allowances have been reinstated for nine million pensioners, However, those unknowingly exceeding the new £35,000 threshold may still miss out. Coventry Building Society is warning that interest earned on standard savings accounts counts towards the threshold, which could push people already close to the limit over the edge. Jeremy Cox, head of strategy at Coventry Building Society, warned that "thousands could still unknowingly be left out in the cold - not because they're earning more, but because their savings are". He explained that "many pensioners may not realise that interest earned on savings held outside of ISAs count towards their total taxable income". He added: "With interest rates still relatively high, even modest savings can generate income that pushes someone over the threshold." He noted: "ISAs offer a tax-free way to keep savings interest out of the income equation. Interest earned within an ISA is never taxed and does not count toward income calculations". Financial planners have informed The Telegraph that those marginally above the £35,000 limit could benefit from slight alterations in behaviour, potentially providing them with an extra bit of cash this winter, reports Birmingham Live. Alice Haine from Bestinvest referred to the new threshold as "is effectively another tax cliff-edge". She stressed: "Paying attention to what constitutes as income may become very important for those whose incomes hover around the £35,000 mark, as a minor adjustment could be the difference between receiving the payment or handing it back through tax." Sir Steve Webb, the former pensions minister now with pension consultants LCP, made it clear: "The Government's own figures clearly suggest that they expect the number of losers from the new policy to rise each year." He warned: "With around two million pensioners currently over the £35,000 threshold, this number could easily rise by another half a million by 2030." Sir Steve raised concerns about a potential covert fiscal tactic, concluding with: "This could end up being another way in which governments use inflation to quietly raise additional revenue year-by-year."
Yahoo
26-03-2025
- Business
- Yahoo
Savers facing ‘long-term threat' to cash Isa limits following spring statement
Concerns that cash Isa allowances are under 'threat' have been expressed, as the Government said it is looking at options for reforms. There have previously been reports that the idea of lowering the annual cash Isa allowance to £4,000, from £20,000, was being mooted, to encourage more people to put their money into investments. Several organisations, including building societies, have pushed back against the idea, while others have argued that it could encourage budding investors. Government spring statement documents said: 'The Government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission. 'Alongside this, the Government is working closely with the Financial Conduct Authority to deliver a system of targeted support to give people the confidence to invest.' Treasury costings documents released with the spring statement assume the overall Isa limit of £20,000 remains in place up to and including 2029/30. The Government feels that engaging with stakeholders across the board is an important part of its work to boost financial services growth and competitiveness. Richard Fearon, chief executive of Leeds Building Society, said: 'We remain concerned about the long-term threat of a reduction in cash Isa allowances. 'Reducing the amount which can be saved would have significant effects on savers, mortgage rates and wider aims to increase the size of the mutual sector. 'We will continue to make the case on behalf of our members for retaining the current rules, whether that comes as a single change or part of wider Isa reforms.' Jeremy Cox, head of strategy at Coventry Building Society, said the current 'sigh of relief' for savers 'may be short-lived'. He said: 'We believe that the current Isa allowance offers simplicity and balance, allowing flexible saving and investing. Cutting tax-free limits or adding complexity with the amounts people can shelter from tax for cash or stocks and shares won't stop savers looking for low-risk, accessible cash accounts. 'Such changes will only lead to confusion for savers and higher costs for savings providers and HMRC, whilst making little impact on UK equity investment. One thing is certain – reducing cash Isa allowances will be deeply unpopular with millions of savers.' Rachel Springall, a finance expert at said: 'There will be savers out there who do not want to be forced to place their hard-earned cash in a pot which could be at risk. 'A stocks and shares Isa is suitable for those who intend to invest over the longer-term, as fund performance can fluctuate over shorter-term timescales. 'However, over the longer-term, stocks and shares Isa can outpace cash returns and beat inflation, but there is never a guarantee that funds will perform well.' Richard Wilson, chief executive of interactive investor, said: 'For some people, having their cash in an Isa is sensible, for others filling their Isa with stocks is the right choice. What is dumb is to load the bases to incentivise the wrong choice.' Andrew Gall, head of savings and economics at the Building Societies Association (BSA), said: 'We're pleased that the Chancellor (Rachel Reeves) did not make any changes to Isas in today's spring statement, recognising the range of views on cash Isas. 'We hope the Chancellor remains mindful that any reduction in the cash Isa limit will not only reduce choice and income for many savers who are committed to cash savings, but it is also likely to lead to wider unintended consequences, without delivering the desired economic growth. 'Cash deposits are an essential part of the funding which building societies use for mortgage lending, supporting housebuilding and homeownership. 'Substantially reducing the role of cash Isas could have knock-on impacts on the interest rates and availability of these loans if providers had to raise the funds from other sources.' Jason Hollands, managing director of Bestinvest, an online investment service owned by Evelyn Partners, said: 'Capping cash Isas as a proportion of the current allowance would essentially turn the clock back by a decade, as prior to July 1 2014 the proportion of the Isa allowance that could be held in cash was limited to 50% of the overall allowance. 'While it is undoubtedly true that too many people keep excess savings in cash and could be missing out on the higher long-term returns that can be achieved from investing, anything that reduces choice and flexibility is a step backward. For some people, investing will simply be too risky and so a reduction in cash Isa limits will just end up exposing more of their savings to tax in standard savings accounts – particularly with the personal savings allowance frozen and dwindling in real terms.' Mr Hollands added: 'The key question is at what level a cap might be set. An annual cash limit of £10,000 for instance would not impact many cash Isa savers but a £4,000 limit, which has been speculated on, would prove a blow.' Anne Fairweather, head of public policy and government affairs at Hargreaves Lansdown said the Government's approach 'makes sense'. She said: 'We're fully behind the Government's mission to increase retail investment, and it's good to see that rather than making an arbitrary change to cash Isas, the Government is taking a more measured and holistic approach, exploring the best ways to support saving and investing through Isas. 'Isas are the first port of call for first-time investors, keeping the framework simple and easy to navigate will help build a British retail investment culture. 'It makes sense not to rush this process. Major change is already on the way, because the advice boundary review will introduce targeted support for retail investors, guiding them to get the asset mix that it right for them, in their circumstances. 'A slower pace of change to the Isa suite will enable the Government to assess the impact of these changes before considering what else should be done.' Chris Cummings, chief executive of the Investment Association, said: 'We welcome today's commitment from Government to boost the culture of retail investment, including looking at options for Isas reforms that will get the balance right between cash and equities to earn better returns for savers. 'Our industry has long called for the Government to create a culture of inclusive investment, which will see more people benefit from investing, and we're pleased that the Government has now heeded this call.' The average value of the top 25 stocks and shares Isas is around £8.8 million, compared with £650,000 for the top 25 cash Isas, according to figures obtained from HM Revenue and Customs (HMRC) by money app Plum, covering the year 2021/22. Meanwhile, some pension experts welcomed a lack of announcements affecting retirement funds, saying it would give people room to plan. Helen Morrissey, head of retirement analysis, Hargreaves Lansdown said the 'quiet' spring statement for pensions is 'something to be grateful for,' giving people 'valuable breathing room for long-term planning'. Steven Cameron, pensions director at Aegon, said: 'We know further changes are coming in this summer's Pension Schemes Bill which will include new measures to ensure all pensions offer good value for money and plans to consolidate small pension pots individuals may have left behind when changing employers.' Mr Cameron added: 'Looking ahead, should budgetary pressures worsen, future changes to the state pension cannot be ruled out. There is an ongoing review of the state pension age.' He added: 'We also can't ignore the state pension 'triple lock', which has proven costly and unpredictable in recent years. While the Government is currently committed to maintaining it, the formula might be adapted.'
The Independent
26-03-2025
- Business
- The Independent
Savers facing ‘long-term threat' to cash Isa limits following spring statement
Concerns that cash Isa allowances are under 'threat' have been expressed, as the Government said it is looking at options for reforms. There have previously been reports that the idea of lowering the annual cash Isa allowance to £4,000, from £20,000, was being mooted, to encourage more people to put their money into investments. Several organisations, including building societies, have pushed back against the idea, while others have argued that it could encourage budding investors. Government spring statement documents said: 'The Government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission. 'Alongside this, the Government is working closely with the Financial Conduct Authority to deliver a system of targeted support to give people the confidence to invest.' Treasury costings documents released with the spring statement assume the overall Isa limit of £20,000 remains in place up to and including 2029/30. The Government feels that engaging with stakeholders across the board is an important part of its work to boost financial services growth and competitiveness. Richard Fearon, chief executive of Leeds Building Society, said: 'We remain concerned about the long-term threat of a reduction in cash Isa allowances. 'Reducing the amount which can be saved would have significant effects on savers, mortgage rates and wider aims to increase the size of the mutual sector. Get a free fractional share worth up to £100. Capital at risk. Terms and conditions apply. 'We will continue to make the case on behalf of our members for retaining the current rules, whether that comes as a single change or part of wider Isa reforms.' Jeremy Cox, head of strategy at Coventry Building Society, said the current 'sigh of relief' for savers 'may be short-lived'. He said: 'We believe that the current Isa allowance offers simplicity and balance, allowing flexible saving and investing. Cutting tax-free limits or adding complexity with the amounts people can shelter from tax for cash or stocks and shares won't stop savers looking for low-risk, accessible cash accounts. 'Such changes will only lead to confusion for savers and higher costs for savings providers and HMRC, whilst making little impact on UK equity investment. One thing is certain – reducing cash Isa allowances will be deeply unpopular with millions of savers.' Rachel Springall, a finance expert at said: 'There will be savers out there who do not want to be forced to place their hard-earned cash in a pot which could be at risk. 'A stocks and shares Isa is suitable for those who intend to invest over the longer-term, as fund performance can fluctuate over shorter-term timescales. 'However, over the longer-term, stocks and shares Isa can outpace cash returns and beat inflation, but there is never a guarantee that funds will perform well.' Richard Wilson, chief executive of interactive investor, said: 'For some people, having their cash in an Isa is sensible, for others filling their Isa with stocks is the right choice. What is dumb is to load the bases to incentivise the wrong choice.' Anne Fairweather, head of public policy and government affairs at Hargreaves Lansdown said the Government's approach 'makes sense'. She said: 'We're fully behind the Government's mission to increase retail investment, and it's good to see that rather than making an arbitrary change to cash Isas, the Government is taking a more measured and holistic approach, exploring the best ways to support saving and investing through Isas. 'Isas are the first port of call for first-time investors, keeping the framework simple and easy to navigate will help build a British retail investment culture. 'It makes sense not to rush this process. Major change is already on the way, because the advice boundary review will introduce targeted support for retail investors, guiding them to get the asset mix that it right for them, in their circumstances. 'A slower pace of change to the Isa suite will enable the Government to assess the impact of these changes before considering what else should be done.' Chris Cummings, chief executive of the Investment Association, said: 'We welcome today's commitment from Government to boost the culture of retail investment, including looking at options for Isas reforms that will get the balance right between cash and equities to earn better returns for savers. 'Our industry has long called for the Government to create a culture of inclusive investment, which will see more people benefit from investing, and we're pleased that the Government has now heeded this call.' The average value of the top 25 stocks and shares Isas is around £8.8 million, compared with £650,000 for the top 25 cash Isas, according to figures obtained from HM Revenue and Customs (HMRC) by money app Plum, covering the year 2021/22. Meanwhile, some pension experts welcomed a lack of announcements affecting retirement funds, saying it would give people room to plan. Helen Morrissey, head of retirement analysis, Hargreaves Lansdown said the 'quiet' spring statement for pensions is 'something to be grateful for,' giving people 'valuable breathing room for long-term planning'. Steven Cameron, pensions director at Aegon, said: 'We know further changes are coming in this summer's Pension Schemes Bill which will include new measures to ensure all pensions offer good value for money and plans to consolidate small pension pots individuals may have left behind when changing employers.' Mr Cameron added: 'Looking ahead, should budgetary pressures worsen, future changes to the state pension cannot be ruled out. There is an ongoing review of the state pension age.' He added: 'We also can't ignore the state pension 'triple lock', which has proven costly and unpredictable in recent years. While the Government is currently committed to maintaining it, the formula might be adapted.'
Telegraph
20-02-2025
- Business
- Telegraph
Pensioners to suffer another blow under Reeves's proposed cash Isa raid
Pensioners will suffer another blow under Labour if Rachel Reeves goes ahead with cutting the cash Isa limit to £4,000, experts have warned. The Chancellor is reportedly considering changes to the cash Isa regime – which currently allows savers to protect £20,000 of their money from tax each year – after a meeting with City executives earlier this week. One idea, championed by fund manager, Fidelity International, is that those wanting to put their money into cash Isas should have a tax-free allowance of just £4,000 – a fifth of its current amount. But experts have said that the move will disproportionately affect elderly savers who cannot afford higher-risk alternatives and rely on cash Isas for safe returns. It comes as Labour continues to face stark criticism for its the removal of the winter fuel allowance for more than 10 million pensioners, as well as the Chancellor's re-introduction of inheritance tax on pensions. Jeremy Cox, head of strategy at Coventry Building Society, said 'Using the tax system to nudge savers into stocks and shares could have dangerous consequences. 'Losing a chunk of your life savings, particularly when you are no longer earning a salary, could mean changing your retirement plans, being unable to afford things you need like care, or reduce your ability to pass on a lump sum to your children or grandchildren to support them to get on the housing ladder. 'Taxing more of people's cash savings, particularly pensioners and those nearing retirement, feels like a very unpopular policy idea.' Dennis Reed, director of Silver Voices, said: 'The Chancellor wants to encourage people to put Isas into stocks and shares, but a lot of older people don't trust stocks and shares, quite rightly, as there can always be a crash. 'With cash, the only thing you have got to contend with is inflation, and the interest on it will compensate for some of that.' Mr Reed said that those coming up to retirement would be more affected, as changes would likely focus on how much money could be contributed in the future. He said: 'It's probably future pensioners who will be affected more. A lot of people have a nest egg for their retirement because of all the unexpected costs which come their way.' Sarah Coles, of Hargreaves Lansdown, said: 'We have clients opening stocks and shares Isas after the age of 100. However, retirees need to hold more emergency cash because they tend to be on lower fixed incomes, so have less wiggle room when they're hit by the unexpected. It means cash Isas can be particularly rewarding as we get older.' However, she cautioned that the Government has still not confirmed any changes will be made to Isas at all and recent reports are 'pure speculation'. It comes as analysis reveals how much extra tax pensioners could expect to pay if the limit on cash Isas was slashed to £4,000. A basic-rate taxpayer putting away £20,000 a year, and earning 4.5pc within a tax-free shelter, would earn £2,329.50 less over a five year period. For a higher-rate payer, this increases to £4,659, and an additional rate payer would be £5,241.38 worse off with an allowance of just £4,000, according to analysis by Quilter. Shaun Moore, tax and financial planning expert at Quilter, said: 'For those who rely on cash Isas for security and liquidity, it would be important that any reforms take into account their need for accessible savings.' The Treasury was contacted for comment.
