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The Office for National Statistics released their unemployment report for the quarter containing December 2023 to February 2024.

Unemployment

 The Unemployment rate has risen to 3.9% whereas last quarter it was at 3.5% leaving many people without a job and a source of income.

The amount of job vacancies and advertising is decreasing by 4.5%, as the number of vacancies in December 2023 to February 2024 was 908,000, a decrease of 43,000 from September to November 2023.

The industry with the most dramatic fall in vacancies was human health and social workers sectors.

Redundancy

People reporting, they left a job due to redundancy has increased by 2.5 per thousand employees.

Number of hours worked

The number of working hours has increased since lockdown measures were relaxed in the UK. However, they are still lower than pre-pandemic levels. From November 2023 to January 2024 there was an average of 1.06 billion hours works across the UK.

Pay levels

In 2024 UK employers should receive a pay rise of 4.4% which should boost the economy and boost morale within workplaces.

The average weekly earnings were estimated at £666 for total earnings and £623 for regular earnings in November 2023. This has been a steady increase over time.

They have also revealed that the monthly update on wage growth, the increase in average employee wages including bonuses was at 5.6% November 2023- January 2024. This shows wages are growing higher than the rate of inflation which is currently at 4%

Annual inflation is slowly falling meaning pay levels can ease.

Forbes reported that there are roughly 3 million workers on the National Living Wage of £10.42 which is set to rise in April 2024.

Why unemployment rates are rising

The Office of National Statistics (ONS) states that the high unemployment rates are due to employers cutting back on hiring new staff. They have stuck to internal staff cutting down the number of vacancies.

They argue that employers are waiting until the economy picks up before hiring new talent as they believe it would be difficult to recruit.

As well as this the cost-of-living crisis is making it difficult to afford to hire new staff.

The ONS have also found a high number of people reporting long term illness deeming them unable to work full time.

 

Budgeting can be difficult to set up and stick to especially if your monthly income is small. If you are trying to save, have noticed the rising prices or just need to cut down to decrease your monthly outgoings then these tips could help you to budget.

If you are trying to save, learn more about finances or want to take on some new techniques for your money then reading from those who have done it or are experts in the field could help you.

There is so much advise out there it can become overwhelming, when finding the book for you make sure it contains what you are looking for and won’t make it more complicated than necessary.

Below is a short list of books which could help you to invest, save, learn about finances and help you build better habits. Pick up one of these helpful reads for world book day and learn more about your finances.

The Spring Budget is here! The Chancellor of the Exchequer Jeremy Hunt has outlined the Spring Budget and the highlights are outlined here.

Introduction

Mr Hunt started by addressing the "tragic loss of life in Israel and Gaza". And announces a £1 million memorial to be created in honour of fallen Muslims who died in both World Wars.

He highlighted the economic difficulties of the last 16 years from the 2008 financial market crashes.

Inflation

He notes the efforts they've made over the last 2-3 years will lead to more growth, more jobs and higher wages. And after some jibes attacking Labour's economic plans he follows up with the OBRs reporting that inflation which was at 11%, it is now at 4%. Today's forecast suggests that inflation will fall under 2% earlier than expected within the next few months.

Cost of Living Support

The Household Support Fund will be extended beyond 31 March and continue for 6 months.

In Autumn he froze alcohol duty until August 2024. He has now extended the alcohol duty freeze to Feb 2025.

The Fuel Duty cut has been maintained and frozen for another 6 months.

He also noted that one of the focuses today is on those falling into debt. He therefore has increased the repayment period for loans to cover household emergencies from 12 months to 24 months and an end to £90 charges for debt relief orders.

Debt & Deficit

Hunt then noted that there is no growth without solid finances. Highlights cutting deficit over last 14 years "by 80% between 2010 and 2019", amounting to £370bn they could then provide during the Covid-19 pandemic.

He says that the focus should be on reducing debt instead of borrowing. OBR announces debt will fall over the next 5 years. He says that today's forecasts show debt will fall to below to 94% by 2028 and 2029, down from over 100%.

He says that UK continues to have the lowest national debt in the G7, lower than Japan, France and the United States.

Turning to growth he notes that the OBR expects the economy to grow by 0.8% this year and 1.9% next year which is 0.5% higher than their autumn forecast. He adds that this is forecasted to continue at this level until 2027.

British ISA

He then announces the creation of a “British” ISA in the form of an extra £5,000 tax-free allowance for the public to invest exclusively in the UK.

Regional Investment

He then announces a large regional investment package in the North West a "North-East trailblazer devolution deal", a package worth over £100m.

He then announces further regional funding , and announces that he has allocated £188mfor projects in Sheffield, Blackpool and Liverpool. as well as £242min Barking Riverside and Canary Wharf.

VAT & Business investment

Hunt also increases the threshold for VAT registration will go up from £85,000 to £90,000.

Now moving to business investment he notes that "Business investment has risen from an average of 9.3% of GDP under Labour to 9.9% under the Conservatives. This year it will be 10.6% of GDP – generating £30bn more in business investment than if it had continued at Labour levels. And it is still going up," he says.

Energy

The secretary for energy security and net zero is investing up to £120m more to the Green Industries Growth Accelerator,

This is to build supply chains for new technology such as offshore wind and carbon capture.

Hunt also announces £270 million for advanced manufacturing industries, to fund car and space innovation.

Creative Industries

The chancellor confirms the Autumn Statement announcement that the rate of tax credit available to the industry will rise by 5% and an 80% cap for visual effects costs will be removed.

Hunt ensures that the tax reliefs just mentioned will become "permanent at 45% for touring and orchestral productions". For non-touring productions that relief will be one of 40%.

Medical Research, Healthcare & NHS

Hunt turns his attention to medical research. He is proposing an additional £45m investment with £3m put into cancer research.

He announces a brand new investment in to life sciences company AstraZeneca.

Hunt also announces an additional 650m investment in the Cambridge Biomedical Campus and a new vaccine manufacturing hub in Liverpool.

Childcare Plan

Hunt discusses the government's plans to address working vacancies and how to fill these gaps, using this to discuss their childcare plan. Previously, it was expanded to 30-hour a week of free childcare.

He announces a guarantee on the rates that will be paid to childcare providers to deliver the government's landmark offer for children over nine months old for the next two years.

Public Sector Productivity Plan

The investment needed to modernise NHS IT systems will cost £3.4bn - but will unlock £35bn of savings.

"And as a result of this funding, all hospitals will use electronic patient records, making the NHS the largest digitally integrated healthcare system in the world," he adds.

Smoking & Vaping Duties

Hunt has introduced a new levy on vaping.

There will also be a one-off increase in tobacco duty.

Air Passenger Duty

The government is increasing the Air Passenger Duty (APD) for business class travellers, Hunt announces.

Housing Tax Reforms

The chancellor says he will scrap tax breaks which make it more profitable for second homeowners to let out their properties to holiday makers as opposed to long-term tenants.

Hunt then announced that stamp duty relief for people buying more than one dwelling is being scrapped as the system was being taken advantage of.

Capital Gains Tax Cut

The higher rate of property capital gains tax is to be reduced from 28% to 24%, Hunt announces. He says the move is predicted to increase revenues as there will be more transactions.

Non-Dom Tax Reform

The government will abolish the current tax system for wealthy foreign residents in the UK who have non-domiciled tax status. By reforming this Mr Hunt says it will make the system "fairer and competitive". It will be replaced with a "modern residency system".

It will raise £2.1 billion with which the Conservatives will use to cut taxes.

Child Benefit Reform

Hunt says he will be reviewing the potential for a new rule on collective household income, rather than on an individual basis, which he aims to introduce by April 2026.

To help in the short-term, he will increase the threshold from £50,000 to £60,000.

And the top of the taper at which it is withdrawn will go up to £80,000.

Half a million families will save money as a result of this.

National Insurance Tax Cut

The chancellor announces a fresh cut to National Insurance contributions for employees from 6 April.

Hunt says he will reduce the rate by a further 2p, worth around £450 a year for someone on an average salary.

 

House prices are falling and many believe they will continue on this path through 2024.

This sounds like good news, however for those selling their properties, this means they are having to reduce their asking price. Also, with high and rising mortgage rates, many people still can’t afford to buy.

Predictions for the Property market 2024

Despite house prices falling they are still far above the rates of pre-pandemic house prices due to inflation and high mortgage rates. People can no longer afford to borrow the money necessary to buy a house meaning fewer houses are being bought. Even if people have saved for a deposit paying back the mortgage loan creates a heavy financial burden.

The Bank of England has held the base rate at 5.25% and as a result the average mortgage rates have shot up.

Why have House Prices fallen?

With mortgage rates rising, less people are able to afford to take out the loan, pay the deposit and it is harder to prove you can afford the high rates.

This means buyer demand has decreased across the property market forcing those selling property to keep the prices low.

Where have prices fallen the most?

Zoopla has found that areas in Essex, Kent, Norfolk and Suffolk have seen the greatest price decreases.

Colchester in Essex has seen a 3.7% decrease with the average house price at £303,500.

Even in popular cities house prices are slowly falling such as, Manchester, Liverpool and Edinburgh.

Rightmove found that houses in Greater Manchester have an overall average price of £253,806 with most sales being for semi-detached houses with a 1% fall in average prices in this area.

Property Investors hunting for deals

The Financial times reports that commercial property investors are on the prowl for cheap deals as rising interest rates force many to sell their property in an inability to refinance. Many are having to sell this year and are forced to keep the asking prices low to match the demand, this means investors could very well find a great deal this year.

When Mortgage rates begin to decline, the hope is that more buyers will flock to the property market as more people will be able to afford the loans.

Should you buy now?

Buying a house when the prices are falling would give you a great chance for a better return in a  few years when the house prices rise once again meaning you could make a bigger profit when you sell.

In areas listed above, the house prices are falling significantly allowing you to find a great deal on your home in these locations.

As well as areas with falling prices, Move IQ has comprised a list of areas where house prices are the cheapest including Bradford (BD1) being the lowest with an average house selling for £69,939 in 2023.

If you can match the costs of mortgage rates and afford the deposit then this year could be yours to take the first step onto the property ladder at a lower cost.

In the Spring Budget  Jeremy Hunt, the Chancellor Exchequer has been hinting that there could be tax cuts coming up.

 

What is income tax?

Income tax is the tax you have to pay on your annual earnings or, if you’re self-employed, any profit you make. Depending on how much you earn determines how much income tax you pay. So, the more you earn, the more money you are paying in tax.

Income Tax is used to pay for public services and is the main source of income for the Government. The NHS, railway systems, education and more is paid for using income tax.

You are placed in band based off of what you earn, decided by HMRC, who collects the tax and the higher you earn, the higher your band, the more you pay and so the amount is as fair as possible.

The band you are in decides your tax code and therefore how much you can earn tax-free before you begin paying taxes on your earnings so, you could earn up to £12,570 before being taxed if your tax code is 1257L.

 

Why would the government cut it?

The government wants to cut taxes to relieve financial burdens across the UK however it has been suggested that there may not be enough money to do this.

With the elections coming up this year, the government is eager to make decision which will increase their poll numbers. As the UK entered a recession, the conservatives are under pressure to alleviate the financial pressures on the public.

 

What this means for your money?

If Hunt decides to cut income taxes then there will be the question of, what will pay for the public sector such as, the NHS? This could be spending cuts or using alternative funds.

If income tax is cut this will mean you will keep more of what you earn and be better off financially.

A tax cut will mean a decrease of how much you pay and will not altogether abolish income tax, they have been hinting at a 1p cut which could be beneficial to many.

 

On March 6th the Spring budget will be announced and we will find out what plans the government have made.

 

ISA stands for Individual Savings Account and allows you to save whilst earning interest and is tax-free. You can save up to £20,000 in a tax year tax-free. Having an ISA helps people to save for things like a house deposit as this a great, money-efficient way to save large amounts.

Cash ISA

This is similar to your regular current accounts as you are paid interest on your balance in the account. This is a simple way to save tax-free in a secure account for your money.

Cash ISA’s have interest rates of 5% or more currently.

Those over 16 can set up a cash ISA.

Stocks and Shares ISA

You can save up to £20,000 tax-free each year and your money is invested into various stocks and shares. This could help your account grow however there is a chance the value can go down as well. You can either choose where you money is invested or the bank will randomly invest your money into different stocks.

Only once you are 18 can you set up a stock and shares ISA.

Lifetime ISA

These are used to help you pay for your first house or alternatively to save for retirement.

This can be in the form of a Cash ISA or a Stocks and Shares ISA where you can save up to £4000 a year tax-free. The government will then add a 25% bonus which has to be used to help you buy a house such as pay for a deposit or for a retirement fund only. If you use this account to pay for anything else then there will be a 25% penalty rather than a reward at the time of withdrawal.

Only those between 18-39 are eligible for a lifetime ISA.

Withdrawing from your ISA

Your ISA will have certain rules regarding when you can withdraw as this is an account specifically for saving.

If you have an instant access Cash ISA you will be able to withdraw money at any time without any changes to your tax-free balance as this account will be for short-term savings.

If you have a fixed rate Cash ISA this will lock the money for a certain length of time and usually the interest rate for these accounts will be higher.

Then, there is the flexible Cash ISA here you will be able to make a limited number of withdrawals without losing any benefits of the ISA.

For the Stocks and Shares ISA you will usually be able to withdraw money at any time as long as you have cash in the account. If you want to withdraw money and you have no cash then you will have to sell shares at the current market price meaning you be losing money.

Why should you have an ISA?

If you are saving for something in particular and can afford to have savings which are in effect untouchable then having an ISA will be very beneficial to you. The money in your ISA should be separate from your personal savings in order for your ISA to be saved for your first home or retirement fund and to reap all the benefits.

With an ISA you are saving more with less.

From the 3rd of March we can expect a 4.9% increase in the price of rail fares across the UK.

This has been capped by the Department for Transport (DfT) to try and keep the prices as fair as they can. The increase in ‘regulated’ rail fares is linked to the annual July retail prices index (RPI) measure of Inflation, which was 9% in 2023.

Millions of commuters will feel the hit of this price increase in their everyday life and with mass cancellations and delays some are calling this an insult to the public.

The Trades Union Congress (TUC) called the rise "excessive" given "widespread cancellations and delays" across the network and called for rail to be brought back into public ownership.

Privatisation of British Rail

The ownership and operation of the railways in Britain were passed from government control into private hands, this process began in 1994 and was completed in 1997.

Now, Railway companies and stations are owned by various private companies.

What are Regulated rail fares?

Any train tickets you buy which are regulated will be affected by the increase of 4.9%.

What are unregulated Rail Fares?

If you buy these tickets they will not be affected by the upcoming price increases.

If your fixed rate term is coming to and end in 2024 you could be affected by the rising interest rates. You will have to remortgage or you will be placed on your lender’s standard variable rate which is often expensive. When you remortgage the interest rate will now be higher for the new term.

If you are unsure about what’s to come with the rising rates you should discuss the options with your lender and they should be able to inform you about your existing plan as well as how you can navigate through the changes.

If you want to know why interest rates are rising and if you will be affected you can find out here. 

With your monthly payments increasing you should make sure you can financially support the new bill. You may have to figure out where to cut costs so you can make the new payments, or there may be alternative plans you can take on.

Once you have determined what your mortgage lender is offering for your new term it is important to figure out what else is out there. Banks will have various offers and rates so choosing the right one for your situation is vital.

It may be helpful to seek out a financial advisor as they will be able to give you choices from across the market and advise you on the best for your personal situation. This could make the process a lot less stressful for you.

If you decide to take on another fixed term loan then consider only choosing a two year plan so you can review the situation again when it ends to make the best financial choices. If you take out a longer term you could be stuck with high rates even if they fall in the next couple of years.

What are the different types of Mortgages?

The rates are often changing and many predict they will decrease towards the end of 2024 so it could be beneficial to not commit yourself to a lengthy term with the current rates.

 

We have recently seen lenders hike up the prices for mortgage funds causing millions of people a much higher rate on their mortgage bills with some at a staggering 7%.

The BBC informs us that banks such as HSBC, NatWest and Virgin Money are all increasing the cost of new deals.

Why are mortgage interest rates rising?

Interest rates continually change to help control inflation and ease the cost-of-living crisis.

The Bank of England sets the base rate, currently at 5.25% which is what it costs lenders to borrow the money to then lend out to customers.

If inflation is going up then interest rates will often follow to try and dissuade people from spending and lowering the demand.

Does this affect you?

If your mortgage term is set to expire this year then the higher rates could affect you when you remortgage. An estimated 1.6 million deals will expire in 2024, according to Banking Trade Body UK Finance and these will be affected by the change in interest rates.

Those on a fixed rate mortgage will not be affected as the rate was agreed at the beginning of the term and remains the same throughout.

If you are on a Tracker or standard variable mortgage then your monthly payments could rise substantially.

Find out What the Different Types of Mortgages are.

Ofgem has announced that from April 2024 the energy price cap is going to be reduced to £1,690 per year for a typical household. This will be £238 lower than the cap they set in January 2024 which was, £1928.

The price cap is the maximum amount energy suppliers are able to charge for each unit of energy.

Are you covered by the price cap?

You will be covered if you pay by, Direct debit, Standard credit, repayment meter and Economy 7 Meter.

The price cap covers 29 million households in England, Wales and Scotland stated by the BBC.

The price cap is based on a typical household which pays their bills by direct debit using gas and electricity. However, If you pay every three months by cash and cheque the price cap falling will not affect you and you will be charged more in April 2024.

How Long will this Price cap last?

Every three months Ofgem reviews the price cap and so in June 2024 the price cap could alter again.

Analysts at Cornwall Insight predict the price cap will see a small fall in July and then increase in October

Ofgem

This is the energy regulator for Great Britain which works to uphold energy regulations. They review the situation every three months and set price caps which energy suppliers must follow.

How does the Inheritance tax work?

Inheritance tax was first introduced in 1984 and is tax paid on the estate, this includes property, money, and possessions of someone who has passed away. This tax must be paid on anything above the value of the £325,000 threshold. If everything above this threshold is left to a spouse, civil partner, charity, or a community amateur sports club there is no tax required to be paid.

The standard tax rate is 40% on what you inherit over the £325,000 threshold with £7 billion being raised annually through inheritance tax which is then spent on public services.

If the person passing away leaves their home to children or grandchildren the threshold can increase to £500,000 before being taxed.

If your estate is worth less than your threshold and you are married or in a civil partnership when you pass away, any unused threshold can then be added to your partner’s so the tax-free allowance increases for them.

In an interview with Clive Barwell, who has over 50 years of experience in the industry told us invaluable information about IHT, that the best and easiest way to save on IHT is to give your surplus wealth away as gifts.

“At the point of making a cash gift, there are no tax implications for either the Donor or the Donee, regardless of the amount given away. However, for the gift to be fully effective for IHT purposes, the Donor must survive for 7 years from the date of the gift. If they don’t, the value of the gift is added back into the IHT calculation upon death.”

Clive Barwell emphasises the significance of planning ahead and believes that “Failing to plan is planning to fail.”

Why does the Conservative Party want to cut Inheritance tax?

Towards the end of 2023, there was speculation that the conservative government would be getting rid of inheritance tax due to their plans for a 'gear change' on tax. Those in favour at this time were warned of the backlash from the public as this change focused on tax cuts for the rich rather than helping ordinary families in a time of economic uncertainty.

Then on December 27th, 2023, The Telegraph reported that several conservative MPs favoured cutting inheritance tax and the change could happen in the Spring budget.

The conservative party are said to be behind Labour in the polls and looking for ways to boost their numbers. The Independent stated that members of the conservative party believed that this could be a “game changer.”

Who will this benefit?

The Institute for Fiscal Studies notes that 1% of people in the UK would receive almost half of the benefits. Only the wealthiest in the UK will come out of this change with a positive outcome.

As inheritance tax is only paid by 4% of households, that’s 1 in 25 paying this tax.

A YouGov survey tells us that 54% of voters considered the tax ‘very unfair’ or ‘unfair.’ With a high proportion of people feeling the tax is unfair, the Conservative Party feel this gives them an advantage in upcoming elections.

How likely is it to be abandoned?

Although there are rumours that many MPs are in favour of the inheritance tax cut there are also some expressing their distaste for this cut. Jonathan Gullis, former Education Minister has said he would rather see “the higher rate income tax threshold raised, or the basic rate of income tax cut now.”

Additionally, Neil O’Brien, the former Health Minister has said, “People most want to cut taxes that fall on low- to middle-earners and council tax and VAT.” The Guardian brings an Ipsos poll to our attention that showed the public preference for a tax cut was one on low-income tax (44%), followed by 36% hoping for council tax cuts.

It is largely felt that IHT being cut is just a speculation as some conservative members are highlighting other, more pressing matters that are important to the public. The MPs are also aware of the likelihood of backlash with this change causing the delay and second thoughts.

The cutting of inheritance tax could likely become a manifesto pledge rather than a set-in-stone policy.

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