Your money in 2019
We will soon be waving goodbye to a turbulent 2018 and saying hello to a 2019 that – because of the ongoing Brexit chaos – will also be swathed in uncertainty. The UK is due to leave the European Union in about 90 days’ time, but will Brexit actually happen, or will it be delayed or even halted? How the year pans out will inevitably have a huge impact on the money in our pockets.
Here are some of the key dates over the next year:
• 1 January The government’s energy price cap takes effect. This has been set at £1,137 a year for a typical dual-fuel customer who pays by direct debit. The energy regulator, Ofgem, says 11 million consumers will get a fairer deal and typical customers on the most expensive tariffs will save £120 a year.
• 2 January Despite all the timetable chaos, strikes and delays that added up to a woeful service for many passengers last year, UK rail fares will rise by an average of 3.1%.
• 2 January The National Rail 26-30 Railcard goes on sale. More than 4 million people will be eligible for the card, which will give up to a third off the price of leisure journeys across Britain for £30 a year. A minimum fare of £12 applies to all journeys made before 10am Monday to Friday. You can buy the railcard up to and including the day before your 31st birthday and keep using it until its expiry date.
• 31 January It’s that time of year again: the deadline for filing your self-assessment tax return online for the tax year ending 5 April 2018 (and for paying any tax owed). Remember that you will be hit with a penalty of £100 if your tax return is up to three months late. You will have to pay more if it is later than that, or if you are late paying your tax bill. You will also be charged interest on late payments.
• 29 March Brexit day. If we crash out, it could be the most shocking day of the year financially, with forecasts of the pound tumbling, house prices tanking, the stock market shrivelling and inflation taking off. But, hey, we do get a new 50p coin to “commemorate” the UK leaving the EU. This is due to be issued by the Royal Mint in the spring. The “Brexit coin” – as it was dubbed by the Treasury – will bear the words “Peace, prosperity and friendship with all nations”. It will also carry the date “29 March 2019”. But will 50p still be worth 50p once we’ve left the bloc? Answers on a postcard ...
• By the end of March It will be easier to have a flutter when the minimum investment for premium bonds is cut from £100 to £25. Bondholders will also be able to set up standing orders to buy a minimum of £25 to save on a regular basis (currently the minimum is £50).
• 1 April Good news for many workers: the national living wage – which was introduced in April 2016 – will increase from £7.83 to £8.21 an hour. This is the statutory national minimum wage (established in 1999) for those aged 25 and over. For 21 to 24-year-olds, the minimum wage is £7.38 and will rise to £7.70. The rate for 18 to 20-year-olds will rise from £5.90 to £6.15, while the rate for 16 to 17-year-olds will rise from £4.20 to £4.35.
• 5 April The last day of the 2018-19 tax year. “If you haven’t taken advantage of this year’s Isa, junior Isa, lifetime Isa or annual pension allowance, this is your last opportunity to do so in the 2018-19 tax year,” says the investment firm Hargreaves Lansdown.
• 6 April The basic personal allowance in England and Wales will rise from £11,850 to £12,500 – which should mean more money in millions of people’s pockets. In the October budget the government claimed this £650 increase means that in 2019-20 a typical basic-rate taxpayer will pay £130 less tax than in 2018-19. Meanwhile, the starting point for 40% higher-rate tax will rise from £46,350 to £50,000. That translates into an £860 cut in income tax – though higher national insurance contributions cut the net gain to about £520 a year. That’s because the national insurance upper earnings limit is linked to the higher-rate tax band, meaning employees will now pay a 12% rate on their earnings between £46,350 and £50,000 rather than the 2% previously.
• 6 April Many people could be in for a shock when they open their April pay packet and discover there is less there than they were expecting. This is because of the latest change to the pensions “automatic enrolment” regime, requiring all employers to automatically enrol eligible workers into a workplace pension into which both the worker and their employer pay some money. The total minimum amount paid in is currently 5% of qualifying earnings (typically 2.4% from the worker, 2% from their employer and 0.6% in tax relief), but on 6 April this will rise to 8% – typically 4% from the worker, 3% from their employer and 1% in tax relief. Tom Selby at investment firm AJ Bell says: “Someone earning around £27,000 and paying in the auto-enrolment minimum will see their personal contribution rise from about £500 this year to more than £850 in 2019-20.”
• 6 April The tax crackdown on landlords continues, with the breaks available for buy-to-let investors due to be reduced again. Landlords used to be able to deduct mortgage interest and other finance-related costs from their rental income before calculating their tax liability. However, this interest relief is being slashed from 100% to zero, with the change being gradually phased in between April 2017 and April 2020. From April 2017, landlords could only offset 75% of their mortgage costs against their profits – falling to 50% in April 2018. This will be cut again to 25% on 6 April (and then to 0% in April 2020). The end result will be that the amount of tax owed by some landlords could double or even triple.
• 6 April Those receiving the full old basic state pension will get a weekly boost of £3.25 a week, with their payment rising from £125.95 to £129.20. Meanwhile, the full new state pension – for those retiring from April 2016 onwards – will rise from £164.35 to £168.60 a week.
• 6 April The lifetime allowance for pension savings will increase in line with CPI inflation, rising from £1,030,000 to £1,055,000.
• 1 May There is bad news if you are one of the 500,000-plus people who hold National Savings & Investments index-linked savings certificates. From this date those people will see their returns linked to the consumer prices index (CPI) measure of inflation, rather than the retail prices index (RPI). This is notable because CPI is generally lower than RPI. The change will be applied to all maturing certificates where the holder chooses to renew into a new certificate. Index-linked savings certificates haven’t been on sale since 2011, but existing holders are able to renew them when they mature. NS&I says the move is forecast to result in a total saving to the taxpayer of £610m over the next five years. That’s a pretty big gain and would appear to suggest that on average, each certificate holder is set to lose out on a total of £1,200 of interest as a result of the change, assuming everyone renewed on to a five-year term.
• 29 August The final deadline for complaining about mis-sold payment protection insurance (PPI). So, in the words of the animatronic head of Arnold Schwarzenegger (which featured in a major advertising campaign aimed at raising awareness), if you haven’t put your complaint in yet, “make a decision, do it now!”
• 29 November Black Friday. Another opportunity for us to buy more stuff we don’t really need.
• 30 November Help-to-buy Isas won’t be available to new savers after this date. “However, if you already have one, you can keep the account open and carry on paying into it for another decade, and you have until 1 December 2030 to claim your government bonus,” says Laura Suter at the investment firm AJ Bell. With this Isa, which is for first-time buyers, for every £200 you save, the government will contribute £50. You can earn a maximum of £3,000 from the government this way.