Weekly Money: the personal finance stories you might have missed 27 to 31 July

The money stories we noticed this week

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The Independent Online

This week: lifetime tax bill climb to almost £750,000; British Gas profits soar but there's no benefit for customers; rip-off payday lender forced to return £20m to borrowers; bankruptcies fall to 25 year low; loses to pension liberation frauds treble; car insurance costs rise

31 July

How much tax will you pay in your lifetime? The TaxPayers’ Alliance reckons an average household will pay £734,240 (in 2013-14 prices) in direct and indirect taxes - that’s an increase of 2.3 per cent on last year’s £717,650.

The figure is equivalent to the total income of a household over 19 years. Meanwhile an average family pays more than £250,000 in income tax alone over a lifetime and almost £150,000 in VAT.  There’s also almost £100,000 in National Insurance and £60,000 in council tax.

But there’s a huge gap between tax bills for top and bottom earners. An average household in the bottom 20 per cent of earners will pay £282,545 tax in a lifetime, while a household in the top 20 per cent will pay £1,488,275.

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The annual cost of a care home has increased by £723 over the past year: more than twice the average £307 pensioner income gains, according to research by Prestige Nursing + Care.

The average annual bill for a room in a care home now tops £29,000 which more than double the average pensioner income, leaving a shortfall of £290 a week, the company warns.

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The cost of car insurance is being pushed up by a fresh wave of claims for personal injury such as whiplash, warns the Association of British Insurers.

The average price for a year’s comprehensive cover increased by 2.1 per cent in the last three months, it said, pushing the average premium to £367. A year ago it stood at £356.

The ABI said that “climbing personal injury claims are pushing premiums higher”. Data from the Claims Portal shows that the number of personal injury claims related to road accidents was 12 per cent higher for the yar ending April 2015 than in the previous 12 months.

30 July

Customers of British Gas will feel let down by the energy giant after it posted a huge profits hike, but is only planning to cut gas bills by 5 per cent this month.

The £528m Britain’s biggest gas and electricity company made in the first six months of the year was more than it made in the whole of 2014.

Hard-pressed customers will understandably wonder why their bills haven’t reflected the increased profits, said Which? executive director, Richard Lloyd. “We expect big suppliers to pass on falling costs to their customers quickly and fairly.”

British gas customers will benefit from an average annual cut of £37 from their gas bills from 20 August, and no reduction in electricity charges. Meanwhile they’ll see that British Gas reported profits of £63 a second.

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The number of people going bankrupt has fallen to its lowest level for 25 years. The Insolvency Service said 3,944 bankruptcy orders were recorded between April and June, the lowest figure since winter 1990.

Part of the reason for the fall is that many people who may have gone bankrupt have opted for the less severe debt relief order, which was introduced in 2009. But even including those and individual voluntary arrangements, the number going bust has reached its lowest level for a decade, with 18,866 cases in the three month period.

The lower figures reflect the six years of record low interest rates we’ve experienced, which have meant fewer folk have gone bust because of unaffordable debt. However that could change if rates start climbing up later this year, experts warned.

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Tesco Bank will include details of “foregone interest” on current account statements. It will show the amount of interest you would have earned if you’d transferred the balance into an instant access savings account.

The move follows a report from the Competition and Markets Authority that banks generated £3.2bn from foregone interest in current accounts – or just under £50 per customer.

Benny Higgins of Tesco Bank said: “The lack of transparency from banks enables them to generate large profits at customers’ expense.”

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The South West of England is the place to go to enjoy a long, healthy and safe retirement, reckons Prudential. It compiled a wellbeing league table, based on factors such as crime rates, healthcare and life expectancy.

Devon topped the table with Dorset ranked second while Gloucestershire, Wiltshire, Somerset and Cornwall also made the top 20.

29 July

Have you switched bank account? One in four young adults up to the age of 34 - the so-called millennials - still uses the bank chosen by their parents when they were a child, despite the fact there are many better deals out there now.

Why haven’t they switched? After all only a third reckon the products offered by the high street banks are relevant to them, according to uSwitch research. Meanwhile a quarter think that tech firms such as Google, Apple and Amazon would do a better job. They’re probably not wrong, but it would almost certainly pay them to switch accounts in the meantime!

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Older adults, meanwhile, aren’t paying enough attention to their pensions. Nearly two-thirds of people aged over 45 hasn’t checked their pension performance meaning around 10m retirement savings schemes are at risk of underperforming, according to Aviva.

“People need to understand what their total savings are across all of their pension pots so they can plan in an informed way for their retirement,” said Clive Bolton of Aviva. “There is lots of online support to help people make sense of their retirement savings.”

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It should soon be easier to switch mobile phone provider, under new proposals from the regulator Ofcom. At present there are different processes depending on whether you want to keep your existing number. If so there’s the added complication of getting a so-called PAC code to pass onto the new firm. Ofcom is proposing that the company you move do has to undertake the administrative burden to make it as easy as possible for consumers.

The move is long overdue, said Which?, but doesn’t go far enough. “Phone companies should also alert customers when their contracts are about to end and unlock handsets for free to promote switching and competition,” it said.

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There were a record 1.1bn credit and debit card transactions in May as we spent some £51bn on plastic.

28 July

After being offered a free pension review, one potential scam victim was visited at work by a bogus independent financial adviser who offered the chance of investing in overseas property.

“He was armed with a glossy, legitimate-looking brochure, and said my money would be invested in a fund registered offshore,” the potential victim said. Paperwork was couriered to him asking him to sign an agreement to transfer his savings.

“I felt uncomfortable and decided it was too much of a risk. I feel lucky though, on another day I could have easily signed those forms.”

He was lucky. He nearly lost his entire £90,000 pension pot to the dodgy scheme. Others have been less fortunate. Losses from pension liberation fraud climbed to £4.7m in May, according to Action Fraud, up from just £1.5m in April.

Minister for Pensions Ros Altmann said: “Criminals often lay a sophisticated trap with glossy brochures and professional websites to make them look credible. Don’t fall for it.” If you suspect a scam, report it to Action Fraud on 0300 123 2040.

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The AA has accelerated into financial services, with the launch of a new credit card. It offers 0 per cent on purchases and balance transfers for 20 months as well as 40 per cent off AA’s European Breakdown Cover.

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Nearly a third of over 55s expect to be in debt in retirement while three-fifths of over 65s have applied for credit in the past two years. But one in eight was turned down because of age, reckons equity release firm More 2 Life. No wonder more are looking to unlock cash in their home. The Equity Release Council reports lending of £384.3m in the last three months, the largest of any quarter since 2002.

27 July

Payday lender Cash Genie has been forced to pay £20m redress to ripped-off borrowers. The high-cost credit company – owned by Ariste Holding Limited – has agreed with the Financial Conduct Authority to hand over the cash to more than 92,000 customers for unfair practices.

The firm used a number of ways to rip-off desperate borrowers who turned to the firm for short-term loans. Shockingly, right from the day it was launched in September 2009 to profit from the number of people pushed into poverty by the credit crunch and recession, Cash Genie charged fees which it was not entitled to under its customer contracts.

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Watch out if you arrange to transfer money abroad through your bank using its ‘free’ service’ - there’s a hidden fee. That’s because even when advertised as free, we get an unfavourable exchange rate, around 3 - 5 per cent over the real rate - because banks use what’s known as the midmarket exchange rate, according to peer-to-peer money transfer platform Transferwise.

Its research suggests 85 per cent of consumers underestimate the true cost of sending money abroad while eight in ten feel “tricked” and “taken advantage of” by the hidden fees.

Taavet Hinrikus of TransferWise said: “It’s deeply unfair for banks to advertise foreign exchange as free to consumers when in fact they just hide their fee in the mark-up they add to the exchange rate.”

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If you get tax credits you need to renew them by Friday 31 July or your payments will stop. You can do so by calling the tax credits helpline on 0345 300 3900 or you can renew your credits online by going to the website tax.service.gov.uk/mdtp/registration

You’ll need to verify your identity and have certain information to hand before you can renew.

For starters you’ll need the 15 digit online reference number which you can find on your annual review. You’ll also need to be able to provide the income you and partner got in the last tax year and details of any changes in your circumstances. .

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Morrisons has today launched its Summer Bonus scheme which can earn shoppers £15. Customers will get a Summer Bonus coupon every time they spend £40 or more in store or online.

You’ll have to collect four different coupons within the five possible weeks of the promotion to get the £15 reward which must then be spent in store or online between 31 August and 6 September.

Looking for credit card or current account deals? Search here

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