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Registered to carry out audit work Association of Chartered Certified Accountants.

www.auditregister.org.uk under number 8011438

Member of the Association of Chartered Certified Accountants
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01332 202660

Blog

Maintaining your NIC contributions record during Covid-19

Adrian Mooy - Monday, November 30, 2020
 
The Covid-19 pandemic has meant that many people will suffer a reduction in income in 2020/21. Not all individuals are eligible for support under the Coronavirus Job Retention Scheme or the Self-Employment Income Support scheme, and those who are eligible for the grants will not generally receive their full pay.

 

Where income drops this may have an effect on the National Insurance contributions payable and the individual’s contributions record, which in turn determines their entitlement to the state pension and contributory benefits. A person reaching state pension age on or after 6 April 2016 needs 35 qualifying years to receive the full single tier state pension.

 

Employees

 

Employees build up their entitlement via the payment of primary Class 1 National Insurance contributions. For a year to be a qualifying year, the employee must have been paid or credited with National Insurance on earnings equal to 52 times the lower earnings limit. For 2020/21, the lower earnings limit is £120 per week – 52 times this is £6,240. Where earnings are between the lower earnings limit and the primary threshold (set at £189 per week for 2020/21) contributions are payable at a notional zero rate, so the employee gets the benefit but does not have to pay anything.

 

Missed weeks need not be a problem in themselves, as long as contributions are paid or deemed to have been paid on earnings of £6,240 for 2020/21. However, where the employee earns just above the lower earnings limit, being furloughed or taking unpaid leave can cause earnings on which contributions are paid to drop below the magic level, with the result that the year is not a qualifying year.

 

Where a person is out of work for a period, depending on whether they receive benefits and what benefits they receive, they may get Class 1 National Insurance credits, which will serve to protect the year. Credits are also paid to those claiming child benefit.

 

The self-employed

 

Although the self-employed pay both Class 2 and Class 4 National Insurance contributions, it is the payment of Class 2 contributions (at £3.05 per week for 2020/21) that provides state pension and benefit entitlements. Where earnings are below the small profits level, set at £6,475, the self-employed earner is entitled but not liable to pay Class 2 contributions. If the earner opts not to pay Class 2 contributions (and does not pay sufficient Class 1 or receive NIC credits), the year will not be a qualifying year.

 

To pay voluntarily or not to pay

 

If a person already has 35 qualifying years or is likely to do so by the time that they reach state pension age, missing a year will not adversely affect their state pension entitlement. However, if they have less than 35 years (and will be able to reach the minimum 10 years needed for a reduced state pension by the time that they reach state pension age) making voluntary contributions can be worthwhile.

 

Those with earnings from self-employment of less than the small profits threshold (£6,475 for 2020/21) can pay Class 2 contributions voluntarily. At only £3.05 per week for 2020/21 this is a cheap and worthwhile option.

 

Where there are no earnings from self-employment, paying voluntary contributions means paying Class 3 contributions at £15.30 per week for 2020/21.

 

Extracting income from a family company with no retained profits

Adrian Mooy - Saturday, November 28, 2020
 
The Covid-19 pandemic has had an adverse effect on millions of family companies, potentially reducing or eliminating profits. Where there is cash in the business that can be withdrawn, possibly because the business has received a Coronavirus Bounce Back Loan or a Coronavirus Business Interruption Loan, and the family need to withdraw funds to meet their living costs, the lack of retained profits may affect how those funds are withdrawn.

 

No retained profits, no dividends

 

A popular and tax-efficient strategy is to pay a small salary and extract further profits as dividends. For 2020/21, the optimal salary is £9,500 (equal to the primary threshold for Class 1 National Insurance purposes) where the employment allowance is not available and £12,500 (equal to the personal allowance) where it is.

 

Dividends can only be paid out of retained profits, so where there are no retained profits, no dividends can be paid.

 

If funds are needed to meet personal living costs, other routes must be taken.

 

Higher salary or a bonus

 

Unlike dividends, profits are not needed to pay a salary or bonus; indeed these can still be paid even if doing so creates or increases a loss. Paying an additional salary or a bonus will come with a personal tax bill once the personal allowance has been utilised and will attract primary and secondary Class 1 National Insurance where earnings exceed the relevant thresholds, set, respectively, at £9,500 and £8,788 per year, and where secondary contributions are not sheltered by the employment allowance. It should be remembered that company directors have an annual earnings period for Class 1 National Insurance purposes.

 

However, on the plus side, salary payments and any associated secondary National Insurance contributions are deductible when working out the company’s taxable profits.

 

Take a loan

 

Rather than paying a higher salary, it may be preferable to take a loan from the company. Most family companies are close companies, such that if the loan is not repaid within nine months and one day of the end of the accounting period in which it was taken, a section 455 charge arises and 32.5% of the outstanding balance must be paid by the company over to HMRC (although if the loan is repaid, this is repayable nine months and one day after the end of the accounting period in which the loan is paid). A benefit in kind tax charge will also arise on the director if the loan balance tops £10,000 at any point in the tax year, even if only for one day. The amount charged to tax is the interest that would be payable at official rate (set at 2.25% from 6 April 2020), less any interest actually paid.

 

Taking a loan can be tax efficient, particularly if paid back before the trigger date for the s. 455 charge. It may be an attractive option to get over a difficult period where a return to profitability is anticipated, allowing a dividend to be declared to clear to loan balance.

 

Benefits-in-kind

 

The provision of benefits in kind can also be attractive as the recipient will pay tax on the cash equivalent value rather than having to meet the full cost personally. Benefits in kind are even more attractive where an exemption can be utilised allowing them to be provided tax free. The trivial benefits exemption can be put to use here where the cost is not more than £50 (and the total cost of trivial benefits is not more than £300 for the tax year).

 

From the company’s perspective, Class 1 National Insurance will be payable on the cash equivalent amount, but the cost of the benefit and the NIC cost is deductible in computing taxable profits for corporation tax purposes.

 

Employees - expenses for working from home

Adrian Mooy - Friday, November 27, 2020
 
The Covid-19 pandemic has meant that more employees worked from home than ever before. This trend looks set to continue following the Government’s latest advice to continue to work from home where you can do so. Further, many business plan to embrace flexible working beyond the end of the pandemic, allowing employees to work from home some or all of the time where their job allows this.

 

However, while working from home may save the cost of the commute, there are expenses associated with working from home. Is the employee able to claim tax relief where these are not met by the employer?

 

Additional household expenses

 

As a result of working from home, an employee will incur the cost of additional household expenses, such as additional electricity and gas costs, additional cleaning costs, and such like. During the Covid-19 pandemic, HMRC confirmed that employees are able to claim a deduction for additional household expenses attributable to working from home of £6 per week without supporting evidence. Where the actual additional costs are more than £6 per week, tax relief can be claimed for the full amount, as long as the employee can substantiate the claim. For example, this could be done by comparing bills prior to working from home with those during the working at home period.

 

Homeworking equipment

 

Employees may have needed to buy office equipment, such as a computer and a printer, to enable them to work from home. Where these costs are not reimbursed by the employer, HMRC have confirmed that employee can claim a tax deduction for the actual expenditure incurred, as long as it was incurred ‘wholly, exclusively and necessarily’ in the performance of the duties of the employment.

 

Other expenses

 

To claim relief for other expenses employees will need to pass the general test that the expense was incurred ‘wholly, necessarily and exclusively’ in the performance of the duties of the employment. Care must be taken to distinguish between expenditure which puts the employee in the position to do their job as opposed to being incurred in the performance of it. Childcare, for example, would fall into the former category.
 
Relief is also denied for dual purpose expenditure, such as an office chair which enables the employee to be comfortable while working, as this fails the ‘exclusively’ part of the test.

 

Making claims

 

Where the conditions for tax relief are met, a deduction can be claimed on form P87 (available on the Gov.uk website) or, where the employee completes a tax return, on the employment pages of the return.

 

Employment allowance – Have you claimed it?

Adrian Mooy - Thursday, November 26, 2020
 
The National Insurance employment allowance enables eligible employers to reduce the amount of employer’s National Insurance that they pay over to HMRC. The allowance, which is set at £4,000 for 2020/21, is available to most employers whose Class 1 National Insurance liability was less than £100,000 in 2019/20, with some notable exceptions, including companies where the sole employee is also a director.

 

The employment allowance must be claimed, but this can be done at any point in the tax year. There is no obligation to claim the allowance from the start of the tax year.

 

The allowance is set against employer’s Class 1 National Insurance until it is used up. It cannot be used against Class 1A or Class 1B liabilities, or to reduce the amount of National Insurance payable by employees.

 

Employment allowance and the CJRS

 

The Coronavirus Job Retention Scheme (CJRS) enabled employers to place employees on furlough and claim a grant from the Government to pay them furlough pay of 80% of their wages (capped at £2,500 per month) while on furlough.

 

Payments made to furloughed employees are liable for tax and Class 1 National Insurance as for usual payments of wages and salary. For pay periods up to an including 31 July 2020, employers were able to claim the associated employer’s National Insurance on grant payments, to the extent that it was not covered by the employment allowance.

 

This meant that if an employer had claimed the employment allowance form the start of the tax year, they would not be able to reclaim the associated National Insurance on grant payments until the employment allowance had been used up. By contrast, employers who delayed claiming the employment allowance could reclaim the employer’s National Insurance on grant payments from the Government under the CJRS and use the employment allowance against their secondary liability once the reclaim option came to an end. This was a beneficial strategy and one that HMRC have not raised objections to.
Remember to claim

 

If the employment allowance was not claimed at the start of the tax year to make the most of the CJRS, and has still not been claimed, eligible employers should now look to claim the allowance so that they can benefit from it.
The allowance must be claimed each year – claims do not roll forward automatically. HMRC guidance confirms that claims can be made ‘at any time in the tax year’.

 

Claims can be made via the payroll software.

 

Late claims

 

If the claim is made late in the tax year and the full amount of the available employment allowance (set at the lower of £4,000 and your employer Class 1 National Insurance liability for the year) is not used, any unclaimed allowance at the end of the year to pay any tax (including VAT and corporation tax) or National Insurance that you owe. Where no tax is paid, the employer can ask HMRC for a refund. Employers can check their HMRC online account to see how much of their employment allowance for the year they have used.

 

Where the employment allowance has not been claimed for previous years, claims can be made retrospectively for the previous four tax years.

 

Paying back deferred VAT

Adrian Mooy - Tuesday, November 24, 2020
 
At the start of lockdown, the Government announced a number of measures to help businesses weather the pandemic. One of those measures was the option for VAT-registered businesses to defer VAT payments that fell due between 20 March 2020 and 30 June 2020. This window meant payment of VAT for the following quarters could be deferred:

 

 • quarter to 29 February 2020 – due by 7 April 2020;
 • quarter to 31 March 2020 – due by 7 May 2020; and
 • quarter 30 April 2020 - due by 7 June 2020.
 
However, businesses opting to defer payments were still required to file their VAT returns on time.
 
VAT due after 30 June 2020
 
Normal service is resumed in respect of VAT which falls due after 30 June 2020. This must be paid on full and on time. Consequently, VAT for the quarter to 31 May 2020 must be paid by 7 July 2020, even if the trader has yet to pay their VAT for the quarter to 29 February 2020. This applies for successive VAT quarters too.
 
Set up cancelled direct debits
 
Where VAT is normally paid by direct debit but the direct debit was cancelled to enable the trader to take advantage of the deferral option, the direct debit needs to be set up again so that payments can be taken automatically. If this has not yet been done, payments will need to be triggered manually to ensure that VAT reaches HMRC on time until the direct debit is back up and running.
 
Paying VAT that has been deferred
 
Deferred VAT remains due – the measure simply provides a longer payment window; it does not cancel the liability. VAT that fell due in the period from 20 March 2020 to 30 June 2020 was originally due to be paid in full by 31 March 2021.
However, in delivering his Winter Economy Plan on 24 September 2020, the Chancellor, Rishi Sunak, announced that instead, he will allow businesses to spread the repayment of deferred VAT over 11 smaller repayments during 2020/21, with no interest to pay.
 
Struggling to pay?
 
Businesses in certain sectors, such as hospitality and leisure, are still not able to operate normally. Where, despite the longer repayment period, a business thinks that it may struggle to repay its deferred VAT, it should contact HMRC to set up a time to pay agreement, which can spread the repayments over a longer period. This should be done before the first payment becomes due.

 

Homeworking equipment and returning to the office

Adrian Mooy - Monday, November 23, 2020
 
Before the Government U-turn, many employees had started to return to office-based jobs. Where the employee had previously worked from home and had been provided with homeworking equipment, there may be tax implications to consider if the employee is allowed to keep the equipment for personal use.

 

The tax implications will depend on the way in which the equipment was made available to the employee.

 

Employer provided the equipment

 

If the employer provided equipment to enable the employee to work from home, no tax charge arises in respect of the provision, as long as the main reason for providing the employment was to enable the employee to work from home, any private use is insignificant and the employer retains ownership of the equipment. This remains the case if the employee retains the equipment to enable them to work from home on a more flexible basis.

 

If, at the end of the working from home period, the employee simply hands back the homeworking equipment to the employer, there are no tax implications.
 
However, if ownership of the equipment is transferred to the employee, there will be tax to pay unless the employee pays at least the market value at the date of transfer for the equipment. The amount charged to tax is the market value of the equipment at the date of transfer, less any contribution from the employee.

 

Employer reimburses the cost of the equipment

 

At the start of lockdown, many employees were required to work from home at very short notice. As a result, it was often easier for the employee to buy their homeworking equipment, and the employer to reimburse the cost. The reimbursement is tax-free as long as the employee acquired the equipment to allow them to work from home and any private use is insignificant.

 

However, if the employee buys the equipment, the title remains with the employee (unless it is transferred to the employer as a condition of the reimbursement).
 
Consequently, if the employee no longer needs to work from home when they return to the office, but keeps the equipment for personal use, there is no tax charge – the employee is simply keeping equipment they already own.

 

Employee buys equipment

 

If the employee buys their own homeworking equipment and the employer does not meet the cost, the employee can claim tax relief for their expenditure. If the employee uses the equipment personally once they return to the office, there are no associated tax implications as the employee already owns the equipment.

 

SDLT and linked transactions

Adrian Mooy - Saturday, November 21, 2020

 

Special stamp duty land tax (SDLT) rules apply where there are multiple sales or transfers between the same buyer and seller.

 

Linked transactions

 

Where two or more property transactions involve the same buyer and seller, they may be ‘linked’ for SDLT purposes. HMRC may treat a person connected to the buyer, such as a spouse or civil partner, a child or a sibling, as the same buyer and persons connected to the seller as the same seller when seeking to apply the linked transaction rules.

 

Transactions count as ‘linked’ if:

 

 • there is more than one transaction;

 • the same transactions are between the same buyer and seller (or people connected to them); and

 • the transactions are part of a single arrangement or scheme or part of a series of transaction.

 

Transactions may be linked because they form part of the same single arrangement or scheme, regardless of whether they are documented separately. So, transactions would be linked if the husband purchases a house and his wife purchases associated land from the same seller. The buyers are connected and purchasing the property and land from the same seller is part of the same deal.

 

Transactions may also be linked where they form a series. There is no limit to the time between transactions for them to be regarded as linked.

 

The whole picture

 

Where transactions are linked, it is necessary to look at the whole picture - the buyer pays SDLT by reference to the total value of all the linked transactions rather than separately on the value of each individual transaction. This may mean that more SDLT is payable than if each transaction is assessed individually – only one threshold is available and the SDLT may be payable at the higher rates.

 

The approach is to work out the SDLT on the total value of all the linked transaction and apportion it to the individual transactions.

 

SDLT rate

 

Where all the linked transactions are residential, SDLT is charged using the residential rates, including the 3% additional property supplement where relevant. The residential SDLT threshold is increased to £500,000 from 8 July 2020 to 31 March 2021.

 

If one or more property is non-residential – the non-residential and mixed property rates of SDLT apply.

 

Example

 

Harry buys two houses to let out from the same builder – one for £450,000 and one for £650,000. The builder has given him a discount for purchasing more than one property. The sales complete in July 2020 and August 2020. SDLT @ 3% is payable on the first property – a total of £13,500 (£450,000 @ 3%).

 

On the second purchase, the SDLT is worked out on the total consideration of £1.1 million. The SDLT is £71,750 ((£500,000 @ 3%) + (£425,000 @ 8%) + (£175,000 @ 13%)). This equates to £35,875 per property, so Harry must pay £38,875 on completion of the second purchase and a further £22,375 on the earlier purchase.

 

Had the SDLT been worked out separately on the second property, the bill would have been £27,000 ((£500,000 @ 3%) + (£150,000 @ 8%)) – a total for both properties of £40,500.

 

Applying the linked property rules increases the bill by £31,250.

 

Same buyer and seller but no link

 

The linked rules do not apply to transactions between the same buyer and seller if there was no prior agreement or option, no special price or discount was agreed and there was nothing else to link the transactions. The additional SDLT cost should be weighed up against any discount negotiated.

Coronavirus Job Retention Scheme

Adrian Mooy - Monday, June 08, 2020
 
The Coronavirus Job Retention Scheme (CJRS) enables employers who are unable to maintain their workforce due to the COVID-19 pandemic to furlough their staff and claim a grant of 80% of the employee’s wages to a maximum of £2,500 a month. Employers are also able to claim the associated employer’s National Insurance contributions on the amount claimed, and also the minimum pension contributions that they are required to make under auto-enrolment. The full amount of the grant must be paid over to the furloughed employee, and the employee pays PAYE tax and National Insurance in the usual way. Employers can choose to top up the amount paid to employees to maintain their usual salary but are under no obligation to do so. The money received by the employer is taxable income and is taken into account computing their taxable profits.

 

Eligible employers

 

Claims can be made by employers who have furloughed staff as a result of the COVID-19 pandemic, as long as they:

 

 • created and started a PAYE payroll scheme on or before 19 March 2020;
 • are enrolled for PAYE online; and
 • have a UK bank account.

 

Eligible employees
 
Claims can only be made in respect of furloughed employees. The scheme does not apply to staff who have had their hours and pay reduced. Furloughed employees cannot do any work for the employer while furloughed, although they may be able to work for a different unconnected employer if their contract permits this or work in a self-employed capacity.

 

Only furloughed employees who were on the payroll on or before 19 March 2020 and in respect of whom a PAYE submission had been made by this date are within the scope of the scheme. Employees who were on the payroll as at 28 February 2020 and who were made redundant after that date and before 19 March 2020 can be included in the scheme if the employer re-employs them and furloughs them. The employee does not need to be re-employed by 19 March to be eligible for furlough.

 

The option to furlough an employee is available regardless of what type of contract an employee is on. Thus the scheme can be used to furlough employees on full or part-time contacts and also those on flexible or zero-hours contracts.

 

Amount of the claim

 

Employers can claim 80% of a furloughed employee’s wages to a maximum of £2,500 a month. The calculation of the amount which can be claimed will depend on how the employee is paid and whether their pay varies. The claim will be based on the employee’s ‘wages’, which are the regular payments which the employer makes to the employee. It will include non-discretionary overtime, fees and commission, but no discretionary payments. Payments in kind are also excluded.

 

The employer can also claim the associated employer’s National Insurance and minimum pension contributions on the amount of the grant.

 

HMRC have produced a calculator which can be used to work out the amount which can be claimed in respect of a furloughed employee.

 

Claims should be made online via the online portal. Employers should receive the money within six working days.

 

30-days reporting for CGT

Adrian Mooy - Wednesday, May 20, 2020
 
Certain changes regarding payment of CGT took effect from April 2020 which align the position of UK residents with that of non-UK residents.

 

Broadly, from 6 April 2020, a UK resident who sells a residential property in the UK will have 30 days to tell HMRC and pay any capital gains tax (CGT) owed.

 

Failure to notify HMRC within 30 days of completing a sale may result in penalty and interest charges.

 

A CGT report and accompanying payment of tax may be required where the taxpayer sells or otherwise dispose of:

 

 • a property that they have not used as their main home;
 • a holiday home;
 • a property which has been let out for people to live in;
 • a property that has been inherited and not used as a main home.

 

There is no requirement to make a report make a payment of tax when:

 

 • a contract for the sale was made before 6 April 2020;
 • the individual satisfies the for Private Residence Relief;
 • the sale was made to a spouse or civil partner;
 • the gains are within the tax free allowance;
 • the property is sold for a loss; or
 • the property is outside the UK.

 

Calculation

 

Subject to certain exceptions, where there has been a disposal of a residential property, payment on account of the CGT will be due on the filing date for the return, which is generally within 30 days of the day after the date the property sale is completed.

 

The payment on account required is the amount of CGT notionally chargeable at the filing date. This is the tax that would be due if, under the normal rules for calculating chargeable gains for a tax year, the tax year ended at the time the disposal is completed.

 

In calculating the amount, any unused allowable losses for capital gains purposes incurred by the time the disposal is completed can be used. Available reliefs and the annual exempt amount are applied in the normal way.

 

The amount of CGT payable on account is the amount after applying the applicable rate of tax to the net gain.

 

Multiple disposals

 

Where there is more than one residential property disposal in the same tax year, the amount of CGT notionally chargeable must be calculated after each disposal.

 

This is, however, done by taking into account that all of the gains (or losses) on those disposals are taken into consideration and any new losses that have arisen on disposals of other assets can also be used.

 

Where there has been a previous return and payment on account for the tax year and the amount notionally chargeable contained in a later return is more than the amount of tax already paid on account, the difference is payable to HMRC.

 

Provisional figures

 

Since the 30-day payment window can make it difficult for some people to provide exact figures, HMRC allow for certain estimates and assumptions to be made.

 

The taxpayer can make a correction once the exact figures are known.

 

If the resulting amount is higher than the amount previously paid, the difference becomes payable to HMRC and interest may be due. No penalty will however, be charged.

 

If the amount is lower, the difference becomes repayable along with repayment interest from HMRC.

 

HMRC are currently developing a new online service to allow taxpayers to report and pay any CGT owed.

 

Tax-efficient savings for all the family

Adrian Mooy - Tuesday, May 12, 2020
 
Although interest rates remain low, there are still various tax-efficient savings incentives available which may help maximise potential returns. This article summarises some of these schemes.

 

Help-to-save
 
The Help-to-save scheme offers working people on low incomes a 50% bonus, rewarding savers with 50p for every £1 saved. Over four years, a maximum bonus of £1,200 is available on savings of up to £2,400. Savings limits are flexible and it is not necessary to pay in every month to get a bonus.
 
How much is saved and when is up to the account holder – the rules stipulate that investors can save between £1 and £50 every calendar month, up to a maximum of £2,400 over a four-year period.

 

Accounts last for forty eight months from the date that the account is opened and the government bonuses are added at the halfway point, i.e. after two years, and at the end of the four year lifespan of the account, or on the date that the individual becomes terminally ill or dies, if earlier.

 

Accounts will be available to open up until September 2023 and may be held by anyone:

 

 • receiving Working Tax Credit;

 

 • entitled to Working Tax Credit and receiving Child Tax Credit;

 

 • claiming Universal Credit and their household earned £604.56 or more from paid work in the last monthly assessment period.
 
The investment limits mean that £2,400 is the maximum an individual can save, with a maximum government bonus payable of £1,200. In comparison, high street banks are currently offering a typical interest rate of between 1 and 2% on savings bonds, which does appear to make the Help-to-Save account a particularly attractive option for someone looking to save.

 

ISAs and Junior ISAs

 

The maximum annual investment limit for Individual Savings Accounts (SAs) remains at £20,000 for 2020/21. The limit effectively allows a couple to save a not-insignificant £40,000 a year and receive interest on the investment tax free. There will also be no capital gains tax to pay when the account is closed.
 
Junior ISAs are available to UK-resident children under-18 and run on similar lines to ‘adult’ ISAs. The maximum investment limit has been significantly increased for 2020/21 to £9,000 (from £4,368 in 2019/20). This increase provides adequate scope for parents and grandparents to make tax-free savings investments on behalf of their children/grandchildren.

 

Help-to-buy ISAs and equity loans

 

Help-to-buy ISAs continue to be available to assist first-time buyers save a deposit to purchase their first home. Broadly, up to £200 a month can be saved in the ISA (along with an initial deposit of £1,000, and up to a maximum of £12,000) and, provided certain conditions are met, the government will provide a 25% boost to the savings up to a maximum of £3,000 per person. A couple buying together could therefore save up to £30,000 tax-free towards the purchase of their first home.

 

The Help-to-buy loan equity scheme for new-build properties is designed to help those with 5% deposits get on the housing ladder. The Government lends up to 20% of the property price and after five years the purchaser starts paying interest on the loan. The scheme was due to end in 2021, but it was announced in the Autumn Budget that it has been extended until 2023. However, the scheme is now only open to first-time buyers and lower regional price caps will be applied.

 

Premium bonds

 

With a return rate comparable with regular savings accounts (currently 1.40%), Premium Bonds (PBs) remain one of Britain’s most popular ways to save. Currently the minimum amount of PBs that can be purchased is £25 and the maximum that may be held is £50,000. It is now permissible for anyone over the age of 16 to buy PBs on behalf of children. The odds on winning a prize in any one month are currently 24,500 to one. There are currently two £1m prizes, five £100,000 prizes and ten £50,000 prizes each month.

 

Although Premium Bonds are not strictly an ‘investment’, they can be encashed at any time with the full amount of invested capital being returned - and in the meantime, any returns by way of ‘winnings’ will be tax-free. ISAs

 


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