Latest news with #CharleneYoung
Sky News
7 days ago
- Business
- Sky News
Money Problem: 'I'm selling my second home - how much capital gains tax do I need to pay?'
Bob Jones writes in with this Money Problem... We bought a house in 2014 for £128,500. We hope to sell it in the coming months for £220,000. How much capital gains tax would we need to pay? If we spend money tidying up the house, can we offset that against the tax? We have looked into this but it is all rather unclear. There are quite a few unknowns here, and Bob did not leave his contact details for us to get in touch, so we have assumed that this property is a second home. We spoke to Charlene Young, a senior pensions and savings expert at AJ Bell... If the original purchase price is £128,500, selling your second home for £220,000 would gain you £91,500. "Assuming the property is in your own name only, and you've made no other gains on other investments held outside an ISA or pension in the year, you can deduct your annual tax-free allowance for capital gains of £3,000 to get a taxable gain of £88,500," Young says. If you own the property jointly, you'll need to work out the gain for your share. Young says that gains from the sale of residential property that isn't your main home are taxed at 18% for basic rate taxpayers and 24% for higher rate taxpayers. If your regular income and capital gains combined are below £50,270, you will be taxed at 18% bar the first £12,570 (your standard tax-free personal allowance). Any amount above £50,270 will be taxed at 24%. What costs can you deduct? "The good news is that some costs can be deducted before you apply your CGT allowance," says Young. The rules allow for the costs of buying, selling or improving your property. Typically, these will include stamp duty on the original purchase, estate agent and solicitor fees, plus the cost of any capital improvements like an extension or a loft conversion. Maintenance costs, such as decorating and repairs due to wear and tear, are not normally allowable and you must keep complete records to prove the costs you do claim. In your specific case, Bob... "Costs and capital improvements of £20,000 in total could lower your taxable gain to £68,500 and mean a lower tax bill," says Young. Did you ever live in the property yourself? You might benefit from tax relief for any periods of time you lived in the property yourself, thanks to something called Private Residence Relief. "If you have genuinely lived in the house as your only or main residence at any point, you get relief for that time, plus the last nine months before sale, even if you weren't living there in those final months," says Young. If we assume you owned the property for 11 years (132 months) before the sale completes, and you lived in it for two years between, up to 25% of the gain could qualify for relief. This is calculated by adding nine months to the two years (33 months) and dividing by 132 months. You can find a second home tax calculator and more information on private residence relief on the website. This feature is not intended as financial advice - the aim is to give an overview of the things you should think about.
Daily Record
21-05-2025
- Business
- Daily Record
Over one million pensioners set to pay higher rate of income tax this year
The Personal Allowance will be frozen at £12,570 until the 2027/28 financial year. The latest figures from the Department for Work and Pensions (DWP) show there are now 13 million people of State Pension age across the country. The current official age of retirement is 66 and set to rise to 67 between 2027 and 2028. The UK Government has confirmed that an estimated 8.51 million people of State Pension age paid income tax in the last financial year and as the Personal Allowance will remain frozen at £12,570 until April 2028, more pensioners are set to pay tax on their retirement income. Charlene Young, senior pensions and savings expert at AJ Bell, warns that over one million pensioners are set to pay the higher tax rate of either 40 per cent (£50,271 to £125,140) for those living in England or Wales and 42 per cent (£43,663 to £75,000) for those in Scotland. The senior pensions and savings expert at AJ Bell, said: 'The nation has fallen victim to the effects of fiscal drag in recent years. Frozen allowances and tax thresholds have pulled more people into the tax system for the first time and hiked the rates of tax people pay as their income rises and they breach a new tax band. 'Pensioners are not shielded from it either - over one million people above state pension age will breach the higher rate 40 per cent threshold this tax year, more than double the number there were when the big freeze began.' Ms Young continued: 'The UK Government is in a straitjacket thanks to its own fiscal rules, and these figures will bolster the arguments of those calling for state pension reform. The full 'new' State Pension is close to breaching the tax-free Personal Allowance, and many pensioners already receive well above this thanks to the way benefits could be built up under the old system. 'The Labour Party has repeatedly pledged to protect the Triple Lock guarantee and has paused further hikes to the State Pension age beyond those due to start in 2026. 'But with pensioner spending predicted to top 50 per cent of the welfare bill by the end of the decade, and the rise in State Pension age from 66 to 67 set to save £10 billion in borrowing, can it really continue to ignore calls for further reform?' The UK Government has confirmed it will honour the Triple Lock policy during this parliamentary term. However, this could see everyone on the full, New State Pension pushed over the tax threshold in just two years' time. Under the Triple Lock policy, the New and Basic State Pensions increase each year in-line with whichever is the highest between the average annual earnings growth from May to July, CPI in the year to September, or 2.5 per cent. It is aimed at preventing the value of the State Pensions being whittled away by cost of living pressures. The New and Basic State Pensions increased by 4.1 per cent in April, however, future forecasts from the Labour Government expect it to rise by 2.5 per cent over the next four financial years. Using these calculations, it puts the full New State Pension on track to be worth £12,578.80 in the 2027/28 financial year - £78.80 over the Personal Allowance. While the amount of State Pension to be taxed may seem relatively small - tax is only paid on the amount over the Personal Allowance - older people with other income streams could find themselves having to part with more cash to pay a tax bill - if it's not automatically deducted from private or workplace pensions through PAYE. Online guidance at on who might need to pay tax on their pension also includes a handy tool to calculate how much tax someone might need to pay, and the different ways this can be done. The latest State Pension Triple Lock predictions show the following projected annual increases: 2025/26 - 4.1%, the forecast was 4% 2026/27 - 2.5% 2027/28 - 2.5% 2028/29 - 2.5% 2029/30 - 2.5% State Pension payments 2025/26 Full New State Pension Weekly payment: £230.25 Four-weekly payment: £921 Annual amount: £11,973 Full Basic State Pension Weekly payment: £176.45 Four-weekly payment: £705.80 Annual amount: £9,175 Future new State Pension forecasts Under a 2.5 per cent increase, the full New State Pension will be worth: 2026/27 - £236 per week, £12,227.30 a year 2027/28 - £241.90 per week, £12,578.80 a year What is taxed Guidance on states: 'You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates. Your total income could include: the State Pension you get - Basic or New State Pension Additional State Pension a private pension (workplace or personal) - you can take some of this tax-free earnings from employment or self-employment any taxable benefits you get any other income, such as money from investments, property or savings Check if you have to pay tax on your pension Before you can check, you will need to know: if you have a State Pension or a private pension how much State Pension and private pension income you will get this tax year (April 6 to April 5) the amount of any other taxable income you'll get this tax year (for example, from employment or state benefits) You cannot use this tool if you get: any foreign income Marriage Allowance Blind Person's Allowance Use this online tool at to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on here.
Daily Mail
30-04-2025
- Business
- Daily Mail
Two in three Premium Bonds holders have NEVER won a prize
More than 22million people hold Premium Bonds in the hope of winning a £1million prize. The are loved by Britons for the thrill of the lottery-style prize draw which takes place each month with its promise of not one but two £1million jackpots for two lucky savers. And also for the fact that any prizes won in the draw are completely tax free, which appeals to savers with bigger pots. However, two in three current Premium Bonds holders - amounting to some 14.4million - have never won a prize, a Freedom of Information request to National Savings and Investments by stockbroker AJ Bell reveals. The figure is based on prize data from February 1994 onwards, the same year the first £1million prize was introduced to the monthly prize draw by National Savings and Investments. It also includes new Premium Bonds holders who were not eligible as their Bonds were not beyond one month purchased. Premium Bond holders need to wait a full month before their bonds are eligible to be entered into the prize draw. There is a whopping £127.7billion parked in Premium Bonds, according to AJ Bell, with the average holding sitting at £5,406. There are likely to be millions of Premium Bonds holders who hold just a few hundreds pounds - or less. The average holding for the 5.1million Premium Bond holders who won a prize in the last 12 months comes in at £23,397, almost quadruple the average holding. Four in five winners who won a prize in the last 12 months won more than once during that period. Millions more £50 and £100 prizes have been dished out since 2022, and they now make up a larger proportion of winning prizes than the lowest £25 prize. The vast majority of Premium Bond prizes were worth £100 or less in 2024. Meanwhile, the number of higher value prizes has dipped. In April's draw, there were four fewer £100,000 prizes from than the February draw, down from 82 to 78. Meanwhile, there were 157 £50,000 prizes, down from 164 in February's draw, as well as 15 fewer £25,000 prizes and 39 fewer £10,000 ones. Charlene Young, senior pensions and savings expert at AJ Bell says: 'While there has been a recent shift to most winners receiving prizes of £50 or £100, instead of the lowest £25 on offer, the vast majority of winning prizes in 2024 were still worth £100 or less.' The Premium Bonds prize fund rate - the average return a Premium Bonds saver would get in a year - currently sits at 3.8 per cent, with the odds of winning a prize in the draw at 22,000 to one. The more you hold, the more likely you are to win a monthly prize. This does not mean that savers who keep money in Premium Bonds will get anything like a 3.8 per cent return on their savings as many may win nothing in a given year. Instead of paying a monthly or annual interest rate, Premium Bonds holders have the chance to win monthly prizes from £25 all the way up to £1million. But there's a chance even the average holding won't win a prize so savers could do better by keeping their money in a high-interest easy-access account. NS&I cut the prize fund rate from 4.4 per cent to 4.15 December 2024. The prize fell again to 4 per cent in January 2025 before the most recent cut to 3.8 per cent. If a saver were to keep the average holding of £5,406 in an easy-access account paying the Premium Bonds prize fund of 3.8 per cent, they would stand to earn £616 in interest over the course of a year, albeit if the rate doesn't change. They could do better still if they kept it in the best easy-access account which pays 4.76 per cent and could earn £669 over the course of a year.
Telegraph
30-04-2025
- Business
- Telegraph
Two in three premium bond savers have never won a penny
Two thirds of savers with Premium Bonds have never won a prize, as experts warn their chances of making any money are 'minuscule'. More than £125.9bn is held in Premium Bonds, which are administered by National Savings & Investments (NS&I) and guaranteed by the Treasury. Prizes are awarded in a monthly lottery, with two savers winning £1m every month. But unlike interest-paying savings accounts, there are no guaranteed returns on Premium Bonds – and those with small holdings are much less likely to win. More than 14.3 million savers have not won a prize since 1994, data shared with investment platform AJ Bell under Freedom of Information rules revealed. Just five million of the 22.5 million holders won a prize between March 2024 and February this year, with 80pc of those who won winning more than one prize. The average winner held £23,397, whereas the average holder had just £5,406 in the account. It comes as the effective prize rate has dropped following interest rate cuts by the Bank of England in an effort to stimulate the economy. From this month, the effective prize rate on the nation's favourite saving product dropped from 4pc to 3.8pc, having fallen from 4.4pc last year. The chances of winning a prize remained the same, but the number of prizes dropped overall, with those winning £100,000 falling from 82 to 78, and those getting £50,000 decreasing from 164 to 157. In comparison, the best savings accounts available are paying as much as 5.07pc with Trading 212, or 4.76pc with Chip. Both the average one-year fixed-rate savings account and one-year fixed-rate cash Isa are paying more than 4.12pc, according to financial analysts Moneyfacts. After reaching a peak of 5.25pc in August 2023, the Bank Rate dropped to 5pc last summer. The rate fell again to 4.5pc in February, with three further cuts expected this year. Charlene Young, pensions and savings expert at AJ Bell, said: 'The chance of winning any of the top prizes (from £5,000 all the way up to £1m) remains miniscule. 'There's a chance even the average holding won't win a prize, meaning savers might be better off considering other options with their cash rather than leaving it to chance in a Premium Bonds account, particularly over the long term.' An NS&I spokesman said: 'Premium Bonds remain one of the nation's favourite savings products and are a flexible and fun way to save. They offer the excitement of potentially winning tax-free prizes every month, the safety and security of the 100pc government guarantee, and easy access to withdrawals. 'Every Premium Bond has a separate and equal chance of winning a prize each month, however the more bonds you buy, the better your chances of winning. 'Each month we pay out millions of prizes ranging from £25 to £1m. In our most recent draw, there were more than 5.9 million prizes worth over £412m.'
Daily Mirror
29-04-2025
- Business
- Daily Mirror
Premium Bonds warning issued as millions of savers told to take their money out
A Freedom of Information (FOI) request obtained by AJ Bell's Dodl investing app revealed that nearly two-thirds of Premium Bond holders - which is equivalent to just under 14.4 million people - have never won a prize A warning has been issued to Brits who have Premium Bonds, as the majority of bondholders will never win a single prize. A Freedom of Information (FOI) request obtained by AJ Bell's Dodl investing app revealed that nearly two-thirds of Premium Bond holders - which is equivalent to just under 14.4 million people - have never won a prize. Premium Bonds are a type of savings product run by NS&I - but instead of earning interest and getting a guaranteed return on your money, you're entered into a prize draw each month. The prizes range from £25 to £1million. You get a unique bond number for every £1 invested, and you can invest from £25 up to £50,000 in total in Premium Bonds. The more Premium Bonds you buy, the more unique numbers you have entered into the draw. Around 22.7million people hold a bond, which makes them one of the UK's most popular savings products. Overall, around £127.7billion sat in Premium Bonds accounts at the end of 2024. NS&I quote a current variable prize fund rate of 3.8%, but there is no guarantee of any return on your cash. The data revealed that millions more £50 and £100 prizes have been dished out since 2022, and they now make up a larger proportion of winning prizes than the lowest £25 prize. Although the number of higher-value prizes has also jumped, most Premium Bond prizes were worth £100 or less in 2024 - meaning the chance of winning the top prizes is still very small. Between March 2024, and February 2025, there were 5.1million winners - 80% of those winners won more than once over those 12 months. However, the average holding for those prize winners during this period was £23,397, which AJ Bell notes is far higher than the average £5,406 holding across all customers. Join Money Saving Club's specialist topics Charlene Young, senior pensions and savings expert at AJ Bell, said that Premium Bonds have "long been a popular place" for savers to stick their cash and try their luck at winning a prize in the monthly draws. They said: "The chance of winning any of the top prizes, from £5,000 all the way up to £1 million, remains minuscule. The market is still flush with cash accounts including tax-free ISAs paying rates higher than the Premium Bond estimated prize fund rate of 3.8%, meaning holders might benefit from shopping around to make their cash work harder. 'There's a chance even the average holding won't win a prize, meaning savers might be better off considering other options with their cash rather than leaving it to chance in a Premium Bonds account, particularly over the long term."
