What is a tax break?

A tax break is a reduction is the amount of taxes a business or individual is required to pay. It is a form of financial relief provided by the government in the form of deductions, credits, exemptions and exclusions.

They are designed to encourage those who receive them to spend this surplus on buying a house, investing in and growing their business or on products and services which boosts the economy.

Individual who receive a tax break commonly include a deduction in mortgage interest, medical expenses and charitable contributions. This lowers their taxable income, reducing the overall tax owed.

For businesses, they can receive deductions for business expenses, credits for research and development as incentives to invest is sectors.

Claiming a tax break could be even more beneficial this year as Labour will be increasing taxes by the next budget.

Is my business eligible for a tax break?

If you own a small business with a rateable value of less than £15,000 and operate from a single premise, you might qualify for a tax break. This financial relief is available to those who have made purchases with their own money specifically for their business. Claiming a tax break can provide crucial support, enabling small businesses to continue growing and thriving.

To be eligible, it's essential that the expenses are out-of-pocket and not reimbursed by an employer. Additionally, you must have paid taxes in the year you are claiming the break. If your employer has reimbursed you fully for these expenses, or if you have not paid any taxes within that year, you would not qualify for the tax break.

Receiving this kind of financial assistance can significantly ease the financial burden on small business owners, allowing them to reinvest in their business operations, expand their services, or improve their infrastructure. This support can be a vital component in fostering the growth and sustainability of small businesses which help to boost the economy as well as their local community.

What can I claim a tax break on?

• Uniforms and tools including cleaning, repairing and replacing these.
• Spending on a vehicle used to business purposes.
• Business travel and overnight expenses including transport, accommodation, food and drink.
• If your business requires you to pay for a subscription to an approved organisation.

How do I get a tax break?

When you file your self-assessment return with HMRC you will have the opportunity to claim a tax break within this process.

Alternatively, you can check the guidelines and claim through the UK government website.

Have you been affected by riots?

With unrest circulating around the UK this year, it is more important than ever to check your insurance policy. If you have any property including, a house, business or car which could be affected, or has been affected by the riots you might be wondering if your insurance will cover you.

A notable instance of insurance covering riot damage comes from the  August 2011 London riots, when insurers reported paying out £200 million to customers who had faced damage to property during the unrest.

Insurance cover for property

Riot coverage should protect property owners from significant financial loss due to civil disturbances which includes damage or theft in the course of a riot.

If you own a business which is damaged in the course of a riot you should file a claim to your insurer as quickly as possible. Under ‘protection of property’ coverage, businesses should be able to recover costs spent to relocate the contents of a property, or vehicle for protection prior to any riot action reaching the location of the business.

Most property policies will cover businesses for any loss of income due to theft or damage to the business caused by vandalism or riot acts. This covers the business whilst any repairs and replacements occur. There is typically a 72 hours waiting period for this coverage.

Will my Car Insurance cover the damage?

If you have fully Comprehensive car insurance will cover you for any damage caused, fire or theft. This policy is most likely to give you the protection you need if you are worried about riot action.

What if my insurance doesn’t cover the damage?

If your insurance does not cover the damage suffered due to riots then the government should compensate you. This was laid out in the first set of legislation, The Riot (Damages) Act of 1886. This act mandated that the government provide financial compensation to those who had business affected by riots if their insurance failed to cover the damage.

As necessary, an updated legislation was created, The Riot Compensation Act of 2016 to ensure property owners were protected. This act modernised the original principles from 1886.

The Riot Compensation Act of 2016

If your property has been impacted by riots, resulting in damage or theft then it is vital to seek compensation through your insurance policy first.

Now, in instances where insurance is either non-existent or insufficient to cover the full extent of the damage you are entitled to pursue compensation under The Riot Compensation Act.

Business owners can receive compensation for damaged or stolen items that were stored in vehicles, damage done to stock-in-trade vehicles and underinsured vehicles.

Property owners can claim compensation for any structural damage inflicted on their buildings. Tenants are eligible for any personal contents that have been damaged or stolen in the course of a riot.

By seeking cover through your personal insurance policy as well as, The Riot Compensation Act of 2016 those affected by any civil unrest should be able to find comprehensive financial protection.

To ensure you have the best protection against damage from riots keep your insurance policies updated and search for the best cover.

3 Insurance companies which can give you full protection

• LV will offer you Comprehensive Car Insurance, covering you from damage, vandalism, theft and fire due to a riot.
• NFU Mutual insurance will cover your business with extra coverage you can add on including damage toward your business, loss of income and theft.
• Direct Line state their coverage includes damage in the event of riots or civil unrest as well as malicious acts towards the business property.

What is the Help to Buy scheme?

The Help to Buy scheme is a government initiative designed to assist first-time homebuyers and existing homeowners in purchasing a new-build property. The scheme launched in 2013 aiming to make homeownership more widely accessible by lowering the financial barriers which prevent many from getting onto the property ladder.

Who Benefits from the Help to Buy Scheme?

Primarily, the Help to Buy scheme benefits first-time buyers, offering them a more manageable way to purchase their first home as the average age of first time home owners is increasing. Existing homeowners looking to move up the property ladder can also take advantage of the scheme, provided they are purchasing a new-build property. The initiative is particularly beneficial for those who struggle to save for a large deposit, as it reduces the upfront financial requirements and helps them secure a mortgage with a lower deposit.

How Does the Help to Buy Scheme Work?

The Help to Buy scheme offers an equity loan to buyers purchasing a new-build home. The government lends up to 20% of the property's value (or up to 40% in London) interest-free for the first five years.

Buyers will only need a 5% deposit, the remaining amount will then be covered by a standard mortgage lender. For example. If you were purchasing a home worth £300,000, you would need a £15,000 deposit, a £60,000 government loan, and a £225,000 mortgage.

After the initial 5 years, the loan will build interest which starts at 1.75% and increases annually in line with inflation +2%.

The loan must be repaid in full when the property is sold or at the end of the mortgage term, whichever comes first. Repayments are based on the property's market value at the time of repayment, meaning if the property's value increases, so does the amount you owe on the loan.

Limitations of the Help to Buy Scheme

While the Help to Buy scheme offers significant advantages, it also has several limitations:

1. Property Price Caps: The scheme only applies to new-build properties with regional price caps. As of April 2021, these caps range from £186,100 in the North East to £600,000 in London. This can exclude potential buyers in areas where property prices exceed the cap.
2. New-Build Only: The scheme is restricted to new-build properties, excluding those looking to purchase older homes or resale properties.
3. Interest Accumulation: After the initial five years, the equity loan incurs interest. This added cost can become a financial burden, especially if property values increase significantly, leading to higher repayment amounts.
4. Repayment Conditions: The equity loan must be repaid in full upon the sale of the property or at the end of the mortgage term. This repayment is based on the property's current market value, potentially leading to higher repayment amounts if the property has appreciated in value.

The Help to Buy scheme is a valuable tool for first-time buyers especially who are looking to build a new build property giving more people a chance to join the property market with lower deposit requirements. There are certain limitations to the scheme which should be carefully considered before agreeing.  If you are trying to save for your first house, then applying for a lifetime ISA may also be beneficial to save up enough money at a quicker rate.

Should you have a Lifetime ISA?

The Lifetime ISA (LISA) is an invaluable tool for both aspiring homeowners and those planning for retirement, offering distinct advantages that make it worth considering. Available to individuals between the ages of 18 and 39, the LISA presents a unique opportunity to save money with substantial government incentives.

The Benefits

One of the key benefits of a LISA is the 25% government bonus on your contributions.

For every £4,000 you deposit per tax year, you receive a £1,000 bonus, which can significantly boost your savings.

This is especially advantageous if you're aiming to buy your first home or save for retirement. However, it’s crucial to note that the maximum you can contribute each tax year is £4,000, and the bonus is capped at £1,000 per year. So, you can deposit smaller amounts and still receive a 25% bonus for example if you deposit £500 for the tax year, the government will give you £125, giving you £625 in total.

Using the account to buy a house

When it comes to purchasing your first home, the LISA has specific conditions. The property must cost under £450,000, and you must plan to live in the home yourself, not rent it out.

Additionally, you need to use a traditional repayment mortgage to qualify.

You can also combine your LISA with you partner if you plan to buy the house together, however, if one of you has previously bought and owned a home then only the eligible one will be able to open an account.

You cannot access the money for the first 12 months after your initial deposit. This rule is crucial for those considering early withdrawals, as it ensures you receive the government bonus only if you adhere to the account’s intended purposes.

Using the account for retirement

Another benefit of the LISA is its flexibility regarding retirement savings. You can use the funds once you turn 60, allowing you to keep your money invested and growing tax-free until then. This can be a substantial advantage for long-term financial planning, as it offers the potential for compounded growth without immediate tax implications.

Penalties for early withdrawal

If you intend to withdraw fund from your Lifetime ISA prior to reaching the age of 60, or before the account has been open for a full 12 months following your initial deposit, you will face penalties.

Specifically, a 25% charge will be applied to the amount withdrawn, you will also be forfeiting any government bonuses if you withdraw money during the first 12 months.

For the first time in two years, the Bank of England has decided to lower it’s rate to 5% from 5.25%.

This remains a somewhat painfully high rate and banks will maintain their caution when it comes to making any changes.

From mortgages to savings accounts, your personal finances could be changing.

What does this mean?

This is a critical move for the UK economy and the decision has been anticipated for some time now. Lowering the interest rate is aimed at stimulating economic activity in the UK as they have a significant role in influencing borrowing costs, consumer spending and economic growth.

Lowering rates typically aims to encourage borrowing and investing by making it cheaper for businesses and consumers to take out loans including mortgages. This comes as Labour’s plan to build 1.5m more houses is under way and encouraging those with a lower budget to get onto the property market through affordable housing. Increasing borrowing should boost spending in various sectors and drive economic growth.

How does this affect my mortgage?

As the Bank of England lower its rate, many will be anticipating banks to follow suit. However, banks will likely be cautious due to inflation, which is projected to rise to 2.75% by the end of the year before dropping again, according to the Bank of England

If you have a fixed-term mortgage, you will not benefit from the lower rate until your term ends, affecting approximately 6.9 million households. Those whose terms end this year might see a drop in rates compared to last year. However, for the 1.6 million households that started their terms in 2021 before the significant rate hikes, the difference will be more pronounced.

UK Finance have estimated an average £28 monthly drop in payments following the announcement however, don’t expect the shift to be instant.

Will this affect my savings?

High bank rates lead to higher borrowing costs for loans and mortgages but also result in better returns on savings. Those with variable rate savings accounts may see changes in their interest rates. This is expected to happen on Friday, so there is time to organize and lock in your savings.

Consider starting with fixed-savings bonds now before rates drop. The Guardian reports that last September, you could earn over 6% on a one-year account, while last week, a one-year account paid 4.64%. By applying for a fixed-rate savings account, you ensure that the interest rate remains unchanged for the duration of the term.

Are their downfalls of lowering the bank rate?

A reduction in the interest rate carries certain risks and potential economic imbalances. It can result in excessive borrowing leading to increased debt levels for business and consumers.

There is also a likelihood that the returns on savings could significantly diminish, lowering earning for savers and affecting their ability to spend.

Will the rate remain at 5%?

The next announcement from the Bank of England comes on the September 30^th, this will be an indicator of the stability of the UK economy. Whether the rates will once again drop, remain the same or increase will be a crucial moment.

Market expectations propose that the interest rate will drop to 3.5% over the next 3 years.

Whilst this will mark a significant reduction from current levels from the past two years, it remains considerably higher than the historic low of 0.1% experienced in 2020.

The plan

Labour are going full steam ahead with their planning for 1.5million more houses to be built before the next election. The plan feeds into their aim for growth in Britain and kickstarting the economy with more people able to get onto the property market, more jobs for those involved in the process of building houses and an emphasis on affordable property.

What is the Housing Crisis?

The housing crisis in the UK means that too many people in the country are unable to truly afford somewhere to live and have no access to safe shelter.

The crisis is that there are around 145,800 children in homelessness accommodation.

As inflation rose and the cost of living crisis spread it meant more and more people were unable to afford a safe, decent living situation and this carried across to the housing market where house prices rose, rent prices rose along with bills and general living costs.

Now, the housing market sees a limited supply of houses for a large demand of first time buyers trying to get onto the property ladder. With mortgage rates still high at 5.25% this still leaves many people unable to buy a house and many looking for cheaper ones which are limited.

How will building more houses help the economy?

The government hopes that with 1.5 million new homes this will increase the supply of property including affordable options for those trying to get onto the property market. Currently first time buyers are feeling defeated by the market will mortgage rates so high it makes getting a mortgage and affording a deposit almost impossible for many.

There are not enough houses to fill the demand so 1.5m houses will hopefully rectify that. Labour are trying to solve the housing crisis with their housing reforms.

Planning permissions become complicated due to ‘green belt’ land areas which limits the expansion of towns and cities.

In 2023 there was 13% of land area in England which was restricted from having any building on it.

Labour will be enforcing a new category of ‘grey belt’ land which will comprise of lower quality land nearby existing developments, roads, petrol stations and car parks. With the aim of creating more affordable housing

Local authorities will be given mandatory targets for building with the aim for 370,000 new homes a year.

With new home owners comes more people paying into the economy as they pay off their mortgage, increase spending in various retail stores to decorate, more household bills being paid and more. The economy will benefit from extra spending in these areas.

Could more houses mean higher prices?

With more homes being built and an emphasis on affordability this could also mean that those homes built on better quality land and in nicer areas could then increase in value.

Zoopla report that 195m homes have increases in value by over 1%  in the first half of 2024 with an average of £2,400 more.

House prices are expected to rise by 1.5% by the end of 2024.

The mortgage rate also factors in as with more homes being built, more people will be deciding to take out a mortgage which in turn supports lenders. Could this help with the decision for the Bank of England to lower rates? This would support more people being able to afford a house in 2024, we will find out today if the bank of England will be lowering the mortgage rates. The Bank of England has officially lowered their rates to 5%. This is a critical moment for the UK economy.

So, building 1.5m more houses will provide more affordable housing options to those who have a smaller budget and especially for first time buyers. However, there is the risk that a greater divide on prices will emerge making current, sought after homes and areas become essentially, premier listings with higher prices.

Rachel Reeves, the new Chancellor has announced that they are currently considering raising taxes in the next budget which is set to be released on October 30.

Reeves has already announced cuts which will be made including restricting the winter fuel payments for pensioners. This come after the news that the conservatives were hiding a £22b hole in public spending due to overspending giving Reeves the task to repair public spending priorities.

Which taxes are likely to be increasing?

The Labour party are sticking to their promise of not raising VAT, National insurance and income tax protecting the finances of working people.

Labour have been forthright with their plans to increase tax for the most wealthy including large corporations who find tax loopholes.

Do Olympic athletes get paid?

Competing at the Olympics takes years of hard work and determination to perform in their sport and compete against other world-class athletes for the chance of winning a medal. For many athletes this is all they require as motivation, however, do we think that Olympic Athletes deserve financial support compensation for their work?

Do all countries pay their athletes?

The UK, Norway, Iceland and Sweden do not pay their athletes for winning or participating in the Olympic games.

The Olympics began for amateur sportsman to compete with no financial reward or bonus on offer. Being an Olympic athlete did and still does bring respect and fame within the industry as well as publicly, especially with the popularity of social media.

Many countries do offer financial rewards in some form to their winning athletes, with the top 15 paying over $100,000 to those winning a Gold medal this year.

Hong Kong are at the top of the list offering over $768,000 for gold and $380,000 for winning Silver.

Singapore reward gold medallists almost 20 times more than the US according the NBC News with individual gold medallists earning $737,000.

The US Olympic and Paralympic committee pays their athletes $37,000 for winning gold, $22,500 for silver and $15,000 for bronze.

Other forms of reward

Malaysia and Bulgaria offer their financial rewards in an alternative way rather than a lump sum. They offer monthly allowances of $1000 for life for gold medallists.

New Zealand offer $40,000 annually until the next Olympic games commences for their gold winners.

Poland is celebrating 100 years since their first participation in the Olympic games this year and are offering an extra reward for their athletes. Forbes reports that Poland are already providing $82,000 for winner of gold, a painting from a talented Polish artist for every medallist, an investment grade diamond and a vacation voucher for 2 for winners of gold. This year they are also providing winners of gold a 2-bed apartment in Warsaw and athletes of team sports in first place will receive a 1-bed flat.

Governing bodies

It is down to each individual governing body for each sport to offer financial reward or not. This year World Athletics are offering gold medallists in track and field a financial reward. They have reportedly set aside $2.4 million for this reward for all winners. This is the first time an international governing body will be awarding prize money at the Olympics.

Other ways athletes make money

Sponsorship

Sponsorship is one way athletes make money aside from hoping for reward money. Athletes such as, Simone Biles will make millions each year from sponsorships alone.

Many athletes will apply for grants to cover the cost of their training and whilst they are at the Olympics, flights, accommodation and food is all paid for.

However, whilst athletes train for numerous hours a day to prepare for the Olympics, those who are less famous and receive no sponsorship deals to keep them going are known to struggle financially.

USA Today Sports reveals a 2020 study done by Global Athlete, which looked at almost 500 elite athletes across 48 countries found that 58% of athletes did not consider themselves financially stable. Most felt they did not receive the appropriate amount of financial support from the international Olympic Committee or National Federations.

So, unless athletes win at the Olympics they will be leaving without a medal and without any financial support for their training and hard work.

Do you think Olympic athletes should be paid?

Rachel Reeves cuts payments for pensioners

Rachel Reeves has addressed parliament to disclose her findings of a Conservative fumble over £22 billion of overspending. This overspending now means that the Labour government will have to find a way to make this back and ensure public spending is going where necessary.

Rachel Reeves has announced the plan to restrict the winter fuel payments this year. This news has come as a shock to those who receive the payment which helps them with their energy bills during the colder months of the year.

Update - September 2024

It was confirmed in parliament that the Winter Fuel Payments will be cut, only pensioners who receive pension credit or other means tested will be offered a winter payment this year. This will reduce the eligible pensioners from 11.4 million to 1.5 million. Many are concerned about how they will cope through the colder months with energy bills rising as well as other living costs.

Labour are cutting costs due to the missing funds from Conservative overspending.

Are you eligible for pension credit?

Those who have reached state pension age and live in England, Scotland and wales could be eligible if you have a disability or a low income. Your income includes, state pension, private pension, earning from employment and most social security such as carer's allowance. If you have a partner, your income will be calculated together.

You could be eligible if you income is lower than;

• your weekly income to £218.15 if you’re single
• your joint weekly income to £332.95 if you have a partner

Who was getting these payments?

In the Winters over 2022-23 around 11.3 million people were receiving the Winter Fuel Payments.

How much were the payments?

Winter fuel payments were around £100-300 depending on the specific situation of each household. This offered significant support for pensioners who are only receiving the state pension. The money was paid in November or December to allow pensioners to keep their heating on.

Age UK has expressed their concern over the new restrictions on Winter fuel payments as they report around 1 million elderly people have a weekly income less than £50 above the poverty line. Without the help of this government funding they could struggle to heat their home over winter.

Who will be eligible now?

Reeves has tightened restrictions which will mean around 10 million people will now miss out on this payment. Only those above state pension age and receiving pension credit or some benefit alternative and on a low income will be eligible.

If your income is below £218.15 a week or £332.95 joint with a partner you will be eligible.

Savings will be taken into account to determine eligibility.

If you suffer from a disability or severe illness then you could also be eligible despite the above.

Not only will the winter fuel payments be restricted this year but the energy price cap is predicted to increase in October meaning bills will be higher again this winter. Pensioners will be without further support to keep their homes heated and safe during the cold winter months. If you need to find way to reduce your energy usage then look for tips here.

Rachel Reeves uncovers hole in public spending

Labour are safely in government and are faced with the mission of restoring the economy and delivering on their promises. Rachel Reeves, our new Chancellor has now reviewed the treasury and has now announced how the Conservative party misled them about what they would find.

Reeves addressed parliament on the topic of public finances where she reported her findings of a £22 billion hole due to overspending from the Conservatives.

Plans which were agreed despite being unfunded leading to such great overspending, which, as Reeves argues has made decisions for this parliament difficult and cuts will have to be made.

Where was the money spent?

Reeves addressed Parliament and states where she found overspending by the Conservatives during their time in parliament.

“If we cannot afford it, we cannot do it” – Rachel Reeves

• Funding given to the rail companies to compensate for time during Covid totalling a £1.6 million overspend in the transport budget.
• The cost of the asylum system including the Rwanda plan totalling an overspend of £6.4 billion this year. The Rwanda plan will be scrapped along with reducing hotel use.
• Military assistance to Ukraine went unfunded which the Labour party will continue to support needing to scrape the funds together to avoid making the same mistakes.
• Rishi Sunak’s proposed plan for a new advanced qualification which would replace A levels would cost £200 million next year and rise further. This was unfunded and will be scrapped by Reeves.
• £1 billion worth of transport plans unfunded will be scrapped including road works.

Reeves making waves

Rachel Reeves announces that where necessary, cuts are being made to ensure public spending is kept within budget to keep overspending down and taxpayer money going where it needs to.

Her passionate speech in parliament ruffled the feathers of the party opposite with Jeremy Hunt claiming she did have access to the finance reports previously and she is making false claims.

The cut to Winter Fuel Payments will be one felt by nearly 10 million pensioners and one that Reeves claims she did not want to make but one which was necessary. Pensioners will only receive the payment if they are on lower incomes and receiving pension credit.

The plan to build 40 new hospitals by 2030 which was set by the conservatives in 2019 and has yet had little progress, most likely due to the finances needed for this project despite not being in the budget. There was a £2.8m investment for 6 hospitals to begin work. Reeves states there will be a review of this and a realistic timetable and plan will be laid out.

The next budget will be held on October 30^th where the Labour party will be able to set out the plans for Autumn/Winter.

The governments offer to Junior Doctors

The government have offered Junior Doctors a pay increase of 22% over 2 years. This comes as Labour aim to end strikes and improve conditions within the NHS for patients and staff.

Why are Junior Doctors striking?

Junior Doctors consist of those who have recently graduated medical school beginning their training as Doctors, in specialist areas as well as those who have 10 years or more of experience as a doctors. The range for the term, Junior Doctor includes professionals at various stages of the beginning of their careers and so pay also varies.

There have been strikes since March 2023 with the same demands which have gone unmet from the government. With 11 strike actions being taken since last year with the demand for a 35% pay increase, the government are eager now to come to a deal.

Doctors have reportedly not been paid in line with inflation for the past 15 years, this explains the 35% pay increase demand.

How much are Junior Doctors paid?

The pay varies depending on the level the doctor has reached. In 2023, the government stated that Junior Doctors earn an average of £20-30 an hour, this came after comments that it would be more financially worthwhile to work serving coffee.

Their contracts typically state they have a 40 hour working week, this does not included extra hours worked overtime, on evenings and weekends. Junior Doctors will be paid for most extra hours but many claim not all are accounted for.

How do Junior Doctor strikes affect the NHS?

Junior Doctors make up almost half of the NHS medical workforce meaning when those positions are vacant there are severe consequences for the hospital.

The strike which took place on and around the general election 2024 led to the postponement of 69,989 appointment, procedures and operations within the NHS. This causes the waiting list to become even longer.

Will they accept this deal?

At the end of 2023, the government offered an 8.8% pay increase rather significantly below the demand for 35%.

This new deal of 22%, the best seen yet remains below their request. The government waits to receive word of whether members of the British medical association (BMA) will accept this offer.

Do you commute to work via train?

With railway fares increasing by 4.9% in March commuting by train is more expensive than by car. If this is your choice of travel then you’re probably wondering if you could reduce the cost at all as many people are struggling. The average commuter by train is paying around £100 more than those who drive, especially in select locations.

There are a few ways which you can use to bring down the price of you commute, make sure they work with your journey.