News

It was a busy summer for government announcements for the self-employed.

As well as details of the fifth and final Self-Employed Income Support Grant (closed as of the end of September), additional changes to taxation – actual and potential – came out which are worth bearing in mind for the future.

Loss carry-back

An important legal change due next year could see a rise in divorce numbers.

The Divorce, Dissolution and Separation Act 2020 should have been implemented in autumn 2021 but has since been deferred to April 2022. The delay could mean a divorce boom in England and Wales next year.

At present divorce in England and Wales depends on one of five ‘facts’:

Inflation has picked up sharply in recent months, with a potential impact on investments.

Source: Office for National Statistics

UK annual inflation was just 0.4% in February 2021, as measured by the Consumer Prices Index (CPI), or 1.4% measured by the Retail Prices Index (RPI). Four months later it was 2.5%. 

The pandemic has highlighted the importance of having a financial safety net should things go wrong. This may be in the form of savings to cover unexpected bills, such as a new boiler, or a period of unemployment.

Insurance also has an important role to play, particularly when it comes to protecting our finances through periods of ill-health. Covid-19 has certainly shown the indiscriminate nature of illness, and how a ‘it will never happen to me’ attitude can be suddenly shattered.

The pandemic may be changing retirement alongside work patterns and expectations.

The acronym ‘WFH’ is now fully embedded in the 21st century lexicon. The working from home shift is already leading major employers to reconsider their office space and employees to review fitting work into their living space. The WFH experience could also accelerate an existing trend for retirement to move to a gradual, phased process rather than an abrupt end to working life.

Next April’s increases to State pensions will now follow a less expected, and less expensive, path.

What percentage increase should apply to State pensions in 2022?

For the last ten years, the triple lock has protected the old basic State pension and the new State pension, meaning the increase is the highest of the CPI change to September, earnings growth or 2.5%. However, the triple lock is not law: the statutory rules simply link rises to earnings growth.

Investment decisions should be based on logic and fact. But it’s easy for emotions and biases to affect your decisions, and this can lead to investment mistakes.

Behavioural bias can be useful in some circumstances. It’s a way of making mental shortcuts when you need to make complex decisions. When you consider how many decisions you need to make day-to-day, being able to make quick decisions is important. However, it’s just as important to recognise when biases can be harmful, and investing is one example.

From the State Pension triple lock to the cost of living, Covid-19 is affecting economic figures. As the economy reopens, you may have noticed the price of things has risen. From your grocery shopping to days out, inflation means the cost of living is rising and could reach 4% this year.

A small amount of inflation is often seen as a good thing. Prices gradually rising can encourage demand, but higher levels of inflation can suggest demand is outstripping supply and that the economy is running into difficulties.

It’s that time of the year when the nights are getting darker and spooky films start to appear on the TV. While the sight of ghosts, vampires, and more could frighten you, tackling your finances can be just as scary, especially if you’re making one of these five mistakes.

1. Failing to claim all the pension tax relief you’re entitled to

How often do you discuss your finances? In the UK, talking about money and our long-term financial plans are often still seen as a taboo subject. Breaking down this barrier could help you and those who are important to you make better money decisions.