The big move in Jeremy Hunt’s Budget yesterday was a 2p cut in National Insurance but the Chancellor announced a number of other measures that could affect your finances. Here six of our experts give you advice on what you should do now to protect your wealth and prosperity: 

SAFEGUARD YOUR FINANCES BY SHOPPING AROUND

 Jeff Prestridge, Group Wealth and Personal Finance Editor

I am sure the nation’s mighty army of pensioners felt a little aggrieved about falling through the Budget’s cracks. Indeed, the country’s near 13million pensioners hardly got a mention in Mr Hunt’s one hour (and more besides) long speech.

But there are steps pensioners can take themselves to safeguard their finances and wealth. These include shopping around as a matter of course for services such as broadband, insurances, mobile phone contracts and best savings deals.

Too many pensioners remain loyal to companies which have long stopped providing them with value for money. LOYALTY DOES NOT PAY.

Also, far too many pensioners on low incomes do not claim benefits that can help buoy their household finances – for example, pension credit.

Jeremy Hunt has done little for pensioners in his latest Budget, writes Jeff Prestridge

Jeremy Hunt has done little for pensioners in his latest Budget, writes Jeff Prestridge

Jeremy Hunt has done little for pensioners in his latest Budget, writes Jeff Prestridge

Don’t be shy or embarrassed, see if you are eligible and claim it.

Finally, ensure any cash savings or investments you have are fully protected from income tax and capital gains tax. That means shielding them inside tax-friendly Individual Savings Accounts.

In the current tax year ending on April 5, you can put a maximum of £20,000 into an Isa – and the same again come April 6 (£5,000 more if the new ‘British’ Isa is up and running in time).

That money then grows free of tax – and can be subsequently withdrawn without incurring tax.

That Isa money will be protected from tax under this Government – and (hopefully) the next one.

INVEST IN BRITAIN BUT NOT WITH A BRITISH ISA

Rachel Rickard Straus, Money Editor

The new British Isa sounded very grand and patriotic when it was announced with much fanfare by Jeremy Hunt yesterday afternoon.

The only problem is most of us will never use it.

It will give all savers an extra £5,000 Isa allowance – on top of their existing £20,000 – to invest in UK companies.

But just 15 per cent of Isa holders use up their existing £20,000 allowance, according to the most recent HMRC figures from 2020-21 – let alone needing another £5,000. Around half save between £1 and £2,499 in a tax year.

Even among Isa savers with an income of between £100,000 and £149,000, just 39 per cent use theirs up.

But while the British Isa won’t be for most people, investing in Britain can be.

Many Isa holders stick to cash Isas thinking that stocks and shares Isas are only for those with a lot of money, but this is not the case.

Most investment platforms allow you to set up a stocks and shares Isa with a lump sum of around £100 or a monthly direct debit of around £25 a month.

Investing in stocks and shares comes with more uncertainty than cash, but taking the risk tends to pay – investing your money in a well-diversified global portfolio tends to make you wealthier than putting into cash over most ten-year periods.

And you can always hold both – a cash Isa for money you might need in the next five to ten years and a stocks and shares Isa for money that you can do without for longer.

Anyone can use their stocks and shares Isa to invest in UK companies – you don’t need a special British Isa to do it.

Watch out, though. Although investing in Britain can sound like a nice, patriotic, safe-as-houses thing to do, it is not without risk.

For most investors, making sure that you have a well-diversified global portfolio is key to increasing your chance of good, but not overly risky, returns over the long term.

You can hold a portion of UK investments – alongside a mix of others. But going all in would be very risky.

And between you and me, even if you do save enough to benefit from the new British Isa, you don’t have to use it to invest in the UK.

Most stocks and shares Isa holders already hold huge proportions of their portfolios in UK investments.

AJ Bell, one of the UK’s biggest investment platforms, says that as much as half of the money invested by their customers in stocks and shares Isas is already invested in UK assets.

Another – Hargreaves Lansdown – says that 83 per cent of shares held by its customers are in UK-listed companies.

Investors can simply use their British Isa allowance to invest in the UK companies that they were going to anyway, and then use the other £20,000 element to invest or save as they choose.

FLY ECONOMY IF YOU DON’T WANT TO ADD HUNDREDS OF POUNDS EXTRA TO YOUR FARE

Dean Dunham, Consumer Lawyer

The Chancellor’s decision to put up air passenger duty on business class seats is likely to raise hundreds of millions of pounds for the treasury. Air passenger duty is a tax on passenger flights from UK airports charged at three different levels: i) a reduced rate for economy; ii) a standard rate for business class; and iii) a higher rate for private jets.

So, flight bookings in economy seats will not be affected, meaning those heading off on holiday with budget airlines such as Ryanair, easyJet and Wizz Air, will not see any increase.

If you are booked to travel business class, your cost of travel is going to be greater from 1 April

If you are booked to travel business class, your cost of travel is going to be greater from 1 April

If you are booked to travel business class, your cost of travel is going to be greater from 1 April

However, if you are booked to travel business class, your cost of travel is going to be greater from 1 April. At present, business class passengers pay from £13 for domestic flights up to £200 on the longest international journeys. However, from 1 April this will now increase to £14 on domestic flights and £202 on the longest international flights, and could even be increased further.

While passenger duty was an obvious target for the Chancellor – adopting the attitude ‘if you have the means to spend more money on the likes of travel, you will be able to shoulder greater tax payments’ – it’s potentially bad news for the recovering aviation sector which needs to be encouraging more people to fly.

I’m already being asked how we can avoid the increase and there are only two options: fly economy or, if you are set on flying business class, book your tickets before April 1 as the tax payment triggers at the point of booking – and not the date of the flight.

CONSIDER DEFERRING THE SALE OF YOUR PROPERTY

Mark Levitt, Partner at Blick Rothenberg

Capital gains tax has been reduced on residential property for a higher rate taxpayer on a second property which is not your principal private residence.

The rate reduces from 28 per cent to 24 per cent with effect from April 6 although the basic rate of 18 per cent remains unchanged.

If you are in process of selling a property, then you should consider deferring the disposal until the start of the new tax year.

For the purposes of determining the date of disposal for capital gains tax it is the date of the contract; in practice this means the date when you exchange.

Given there are 29 working days left until end of the tax year you will need to weigh up the risk of losing your sale and the purchaser asking for a reduction in the price to share in your tax savings!

If you own a furnished holiday let the budget has closed the door immediately on the favourable tax treatment on the sale of a property sold.

For on sales after 6 March sellers will not be able to claim business asset disposal relief, which can reduce the capital gains tax rate to 10 per cent and will instead need to budget for a tax rate of 24 per cent. This is quite draconian given that the abolition of furnished holiday lets is from April 6, 2025.

NS&I BRITISH SAVINGS BONDS MAY BE WORTH A LOOK

Sylvia Morris, Money Mail’s savings expert

Good news for savers, as Jeremy Hunt announced that National Savings & Investments will offer British Savings Bonds next month.

But should you open one or steer clear?

Although we already know that the bonds will run for three years and offer a fixed rate of interest, we don’t yet know how much interest they will pay.

However, judging by previous offerings from NS&I, they may be worth a look.

NS&I has been known to offer top rates. Last summer it had a one-year bond on sale paying a top 6.2 per cent.

It proved so popular that over a quarter of a million savers flocked to buy it in the five weeks to October 5 that it was on sale.

The Budget small print also revealed that NS&I has to raise even more cash this year than last.

It has a target of £9billion (with a range of £4billion either side of this figure) to raise for the Government in its next financial year which starts on April 1.

This is up on the £7.5billion (plus or minus £3billion) in the current financial year. That gives it more leeway to offer a competitive bond product.

However, NS&I doesn’t always offer the best rates.

It currently offers Green Savings Bonds which run for three years. The money raised is used to fund green projects chosen by the Government.

These pay only 2.95 per cent after the rate was slashed for new savers at the end of January from 3.95 per cent.

This is far below the rate offered by banks and building societies which are willing to pay up to 4.65 per cent if you tie your money up for three years.

The top rate is 4.65 per cent from Hampshire Trust Bank while Skipton Building Society pays 4.75 per cent over a 30-month term.

Rachel Springall, of savings scrutineers Moneyfacts, says: ‘NS&I is a trusted brand, but savers will look elsewhere if they can earn much higher rates.’

PAY EXTRA INTO YOUR PENSION FOR A POTENTIAL RETURN OF CHILD BENEFIT

Simon Lambert, Publisher, This is Money

One of the traps in Britain’s tax system was addressed by the Chancellor but unfortunately he chose to kick the can down the road rather than get rid of it altogether.

From April, child benefit will now be removed between £60,000 and £80,000, rather than the current £50,000 to £60,000.

Although raising the threshold will mean that an estimated 170,000 families now keep payments they would have lost, it doesn’t change the fact that the child benefit high income charge creates sky-high tax rates for those affected by its removal.

The gradual removal of child benefit payments between £50,000 and £60,000 has created marginal tax rates – the rate paid on the next pound earned – of 54 per cent for an earner with one child and 63 per cent for a parent with two children.

Mr Hunt also once again failed to address a tax trap further up the income scale, where the removal of the personal allowance leads to a 60 per cent marginal tax rate between £100,000 and £125,140.

The important thing to remember for parents due to have child benefit removed, or those earning over £100,000, is that there are things they can do about this.

The child benefit high income charge and the personal allowance removal are based on ‘adjusted net income’, which is total taxable income less certain reliefs, including pension contributions.

So, if you make an extra payment into your pension, it reduces your adjusted net income and can return some of your child benefit or personal allowance.

Anyone facing the high marginal rates backed into system should weigh up whether they can do this and the benefit they would get from it.

In the meantime, we’ve got our fingers crossed that these tax traps are one day properly removed.

This post first appeared on Dailymail.co.uk

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