Run for cover to beat tax rise

Personal Finance

BORED with the Budget already? Then this column will only give one tip, and there's a good chance it will save you money. Anyone planning to buy medical, travel, motor or household insurance should do so on Monday. Insurance premium tax - currently 2.5 per cent - is a top tip to go up, possibly to as much as 6 per cent. The equivalent tax is much higher elsewhere in Europe and, for the Chancellor, it's "fairly easy money", according to Maurice Parry-Wingfield of Touche Ross.

If it does go up, you cannot assume insurers will absorb the extra cost. An increase to 6 per cent could cost the average household pounds 32 more a year. Of course you cannot do anything about the annual renewal dates of existing policies. But if you are planning to take out a new policy, then it might well be worth getting your skates on. Any tax saving could also be repeated in future years if your annual renewal date beats further expected increases in this tax.

TESSA ACCOUNTS start maturing in January, and some lucky savers will get a return of pounds 13,000 or more if they have saved the maximum pounds 9,000 - but only if if you snapped up one of the top fixed-rate offers available five years ago.

Among Tessas with variable rates, the thousand savers with the foresight to open accounts with the Kent Reliance building society five years ago are looking at the best return, according to a survey by Moneyfacts, the company supplying Your Money's tables of savings and borrowing rates. People who have saved the maximum of pounds 9,000 over the past five years are looking at a potential return of pounds 12,400. By comparison, returns from the high street banks will be below average at less than pounds 12,000. The best of the high street names is the Bradford & Bingley building society, with its High Return Tessa.

Past performance is no guide to the future, of course. The Kent Reliance's Tessa is no longer available, and the society says it may only offer a new Tessa to existing savers. But, says Moneyfacts, the survey does highlight the tendency for smaller societies which launch accounts with competitive rates to be likely to keep those rates competitive.

Savers with the Dunfermline and National Counties building societies stand to get the next best Tessa returns. Their larger society brethren could take some lessons on mutuality here.

DO NOT be misled by all the talk of PEP price-cutting. There are three main charges to look out for on PEPs - initial, annual, and exit: what, respectively, is taken out of your money at outset, every year and when you cash in. The PEP price war has been about cutting initial charges, in some cases to zero. But what is more important over the longer term - even five years, which is the minimum period you should put money into a PEP for, and almost certainly over 10 years - is the annual charge. The PEP with no initial charge is not necessarily the best value. A PEP with a higher initial charge may take less of your money overall than a PEP with a lower initial charge. It is the total that is important. That is why a new survey by the specialist magazine Money Management makes revealing reading. It looks at how much money might be taken from a pounds 6,000 PEP over 5, 10 and 20 years.

Legal & General's new UK Index-Tracking PEP has its claim confirmed as being the cheapest stock market PEP over five years among those offered by unit trust companies. It might take pounds 297 out of your original pounds 6,000 over five years, according to the analysis. The new Virgin Growth PEP is close behind. Neither makes an initial charge. But a popular Pep that also advertises no initial charge - M&G Managed Income - will actually take more in charges over five years than a good, but less hyped PEP with a 3 per cent initial charge - the Morgan Grenfell UK Tracker.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Frank Turner performing at 93 Feet East
musicReview: 93 Feet East, London
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

Extras
indybest
Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee