Question Time: Will ISA changes hit what I’ve saved? Safer to stick cash under the bed? A credit card for my eight-year-old?

0:00Hello and welcome to the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. And this is our question time pod, in which I answer your questions about absolutely anything and everything within reason. And the questions you asked me this week are... Martin, is it time to stick my cash under the mattress to stop it being taxed, or is that just too cynical? Should I give my eight-year-old a credit card? Car finance, I'm thinking of complaining, but if I complain, can that jeopardise my current car finance agreement? How exactly does the marriage tax allowance work?

0:38And will the changes in the ISA that are predicted for the budget affect the money I've already got in one? Plus, you also asked me, what did I have for tea last night? Well, I did say you could ask absolutely anything and everything. Play the theme tune.

1:07So welcome to this episode of a Martin's Money question time, where you get to ask me questions on anything and everything within reason. And the curator and decider and grand poobah of what questions I am going to be asked is with me now. I'm building his role. I'm not quite sure why. Welcome, podcast producer Matt. It's funny, isn't it? I welcome you, podcast producer Matt, but you're actually the producer of the podcast. Arguably, you should be welcoming me. How does it work? What's the etiquette? I think, well, it's your podcast, isn't it? So you welcome me onto your podcast. However, what I will say is a lot of emails are coming through.

1:45Hello, Matt. I know. It's just, it's getting, I'm going to have to have words with the powers that be. We had a wonderful podcast when Michael was doing it last time, I have to say. And Michael was self-effacingly asking for help in broadcasting and what the tips of broadcasting were. But you, Matt, you're already over-comfortable, but you are rather good at it. And I like working with you. So shall we just get on and do some questions? Thank you very much. Yes, let's start with a question from Lou. Hi, Martin. I'm seriously thinking about putting... Yeah, hi, Martin. Note, hi, Martin. This one was tweeted, so it wasn't actually emailed.

2:17So my point still stands. Hi, Martin. I'm seriously thinking about putting any extra cash under my mattress because I feel it will be taken or taxed if I do anything else. Do you think I'm being too cynical? I never think anyone is being too cynical, but I think we have to temper our cynicism with practicality. So let's just look at exactly what the situation here is. I presume you're not talking about money that you've earned and you have to pay income tax on. This is money that you already have. Well, look, I mean, if you put money in savings, for example, your savings are not taxed. It is the interest you earn, the extra money that savings generates you that are taxed.

2:55So you're not going to lose money from tax on savings. You will just lose some of the interest. The same is true if you invest it. It's the capital gains tax, the amount that you pay on the profits, or you might also pay income tax on the dividends as well. But it's on what you make. It's not on the amount that you have. Now, you might be saying, are they going to change that? Well, I think that would be absolutely radical, virtually unthinkable and probably getting close to right in the streets territory. So I think probably not in terms of money that you've actually got. So now let's just do a practical comparison.

3:27If you put money in a UK Regulated Savings Institute, so pretty much all the bank accounts and anything I ever talk about, then you are protected up to£85 ,000 per person per financial institution. And so if you had £850 ,000 and you put it in 10 different institutions, each one of them would be protected because you spread it across. If you put money under your mattress and someone breaks in and steals the money. Even the best home insurance policy normally only covers you for up to£1 ,000 worth of cash. And also, you're having to pay for the insurance policy to cover you for up to£1 ,000 worth of cash.

4:06Whereas money in a bank or financial institution that is paying you interest, you are being paid effectively to put your money there and you get the protection on top. So if we're just talking really sensibly on a like-for-like comparison between keeping money under your mattress and putting it in a savings account. It is an absolute no-brainer. Put it in a savings account. OK, what's next? It's second question. Normally you put a caller here. Is it a caller? Of course. I'm getting used to the way you work. Nothing if not predictable. Right, we've got Matt, great name, in Liverpool. Hi, Matt, can you hear us?

4:45I can, yeah. two mats it's a brace of mats what can i do it's a good name it is a good name i'd say it's the best name it's got it's got three decent letters in i'll give you that right what's your question matt so my question is i i i can't claim glory for this idea but i heard from another dad on our school run um about um about um being maybe being able to add my daughter she's eight years old where she's just nearly eight years old, potentially being able to add her onto my credit card, which is very healthy and gets paid off in full, obviously, every month on a direct debit. And by doing that, she would therefore accumulate some credit history, positive credit history.

5:38and by the time she's 16, 17, 18, that would suddenly kind of pop out as if by magic. So my question was, does that work? Can I do that? I've never heard of it before. Do you want the short answer? I'll give you the short answer first. No, it does not work. Okay. And now I'll give you the long answer. But I tell you what, it does give me an idea for a money mastermind for Adrian in the normal podcast because I think it's a good question for him. So here's the point. First of all, there's no such thing as a joint credit card, right? You can have a joint bank account. You can have a joint mortgage.

6:14You can have joint savings. You can't have a joint credit card. What a credit card is is you have a credit card and there's a second card holder on your account. It's still your account. It's your liability, whatever somebody else. So even if we were in a position where you could give your daughter a card, it's still your account and your credit score. It's nothing to do with her. It is just you. It's just a card. It's just you giving her access to your account to spend. I mean, and equally, you can't get credit until you're 18 anyway. So they're not putting you on credit files until you're 18 in that nature in any sense.

6:47So I'm afraid while I understand the concept, I wouldn't do it. I also think, well, if you're just giving your daughter a spending card, giving her access to a credit card wouldn't be so bad. But I generally think while I'm, you know, I'm pro credit cards used in the right way, you'd probably be a lot better to financially educate your daughter with something like one of the prepaid cards that are out there, like the Hyperjar card, which is mostly free, that she could spend on and you could have some spending controls and you could start to do some financial education with her. You're not going to be able to boost a credit score, but it's a great time.

7:18You know, it's the classic issue of the age. And funny, because, you know, I'm a big proponent of financial education. I've done a lot of work on it. But when you, I don't know, how old are you, Matt? 53. We're exactly the same age. Yeah, there we go. So when we were at school, when we had exposure to money, it was notes and coins that we would talk about. Now, the truth is your daughters eight, my daughters 13, they are very rarely going to use physical money. Most of their life will be digital money. So actually, while it is important to educate them about how notes and coins work, I also think that we have to start to educate them about how digital transactions work from an early age as possible.

7:59So having her own account, something like a prepaid card, that you can say you've got this much money and she can see when she spends it that that amount reduces and you start to get familiar with a digital operating account system. I actually think it's really useful as well. Yeah, we're with Starling. So I think they have one, don't they? Starling Kite. Exactly. If you're a Starling existing customer, then your daughter can have a Starling Kite prepaid card for free, I believe. So yeah, perfect. Yeah. And I would, so you can't do the credit card stuff, but I think the earlier you started with that and, you know, you control the amount of money on it so there's no risk and that she starts to get that, then I think the better the financial education.

8:39And I would talk to her about it. I don't know if you have savings for her. I don't need to know that particularly. But again, I think of the age, and I do with my daughter, I talk about what an interest rate is. And I'm sure you don't need an explanation of that. And a better interest rate is better. so I do some of the research with her just to give an exposure to some of the decisions. And it's still a lot of fun at eight. It doesn't sound it. But, you know, you sound like a good dad. I'm sure you can make it fun. Yeah, I agree. I mean, you know, my mum and dad were always very, they were very transparent about how much they earned and how much we had for, you know, for holidays.

9:16And so I've always had that mindset. And we do have savings. We've got various savings for it and a junior ISA and so on. I haven't really talked to her about those much yet, but I certainly will at some point. I think transparency is really interesting, really important, because I remember once I had someone on my old TV roadshow who came up and she had been saving money for her three children who were teenagers, and she hadn't told them about it and wanted to know when does she tell them and once they're over 18, how can she hide the money from them? And my answer was, why are you doing that?

9:47She says, because I'm worried they're going to spend it and I'm a single mum. And I was like, look, you've done a great job in saving for them. I suspect you've done a great job as a parent. Unless you have a specific reason that you think they may be irresponsible, then actually being open, doing the decisions with them, saying I've put this money aside, but I don't want you to spend it until I put it aside for something important. Trusting them builds the skills that they need. Hiding it from them doesn't give them the access to the skills that they need and makes them more likely to be flippant.

10:15And we have this big scene. It was television and she went in and she did it and she told them and she was petrified. and her oldest, who she was most worried about, said, well, what did she say? I thought when you might need a car or a house deposit later. And she'd given him, it was a passbook at the time. I wanted her to change the account, but we won't talk about that. And he said, well, here, thanks for telling me, mum, here, you have the passbook back. You look after it. And all the big drama was like, actually, unless there's a reason that you don't, we need to trust our kids. And the sooner we trust them and educate them about financial responsibility, the more chance we have them of actually being financially responsible when they're older.

10:51We weren't expecting to go there, but it's quite interesting. But yeah, as soon as she's 18, you'll have taught her those habits and then you get her a credit card that she pays off in full and she puts£50 a month on and that will start to build her credit file as long as she's trustworthy with it. Thank you for your call, Matt. You're welcome. Thanks for having me on.

11:10If you've got a question on anything and everything, within reason, all you need to do is email martinlewispodcast at bbc.co.uk

11:23Right, where are we going next Matt? We've just done a caller so now we're going to do a non-caller. Exactly, a question. A read. A read. I need to get my voice on it don't I? Susie has replied to your post on Facebook with a question. Can I just ask before we do that are you any good at accents Matt? I'm not bad. I think just any listeners who want to put a question in, if you want to say where you are in the country and ask Matt to do the accent, I think we might start punishing him with building his role by forcing that in future. Carry on. Let's do this one. Feel free to do that, listeners.

11:59Susie from No Current Place, apparently. She has said, I had car finance on several cars with the same finance company. The current car is financed by them again. Could putting in a claim jeopardise the current agreement? No, absolutely not. That would be a breach of FCA regulations. You are absolutely free to make the claim. The FCA redress scheme is out for consultation at the moment. It should be launching sometime in early 2026. and as a part of that, you cannot be penalised. You can't be penalised for complaining about their bad behaviour. You cannot do that. Now, this principle first came out, I've been doing this a long time now, I was known as the big gob in chief of the campaign to reclaim bank charges in about 2005, 2006, and at the time, we were starting to see some firms penalising customers who complained, saying, OK, we'll sort your complaint about, but we don't want your custom in future, because that was the first of the sort of big mass complaint type systems that was coming from customer generated as opposed to overarching bigger regulator type generated.

13:04And then one of the things I campaigned on at that is to make sure that that was banned and they weren't allowed to do that and rules have changed for a very long time now. You can't be penalised for complaining about their bad behaviour. So no, don't let it put you off at all, Susie. What next? Let's do a caller. Let's speak to Andy. Andy, he is in Telford. Hi, Andy. Hi, both. How are you doing? Hello, mate. Well, good. I'm good. I think Matt's good as well. I'm good. Okay. What can we do for you? Excellent. Well, my wife and I both, well, we make use of marriage allowance. So she transfers part of her personal tax allowance to me.

13:41Now, my salary is almost at the threshold of the higher rate of tax. I know at that point we won't be sort of able to claim marriage allowance anymore. Correct. It's a cliff edge, yes. Yeah. So my question is, when do we stop claiming this? Is eligibility based on my gross salary or is it going to be my net salary after I paid my pension contributions? Yeah, very good question. Just for those listening who don't know what the marriage tax allowance is, this is a special allowance for married couples or those in civil partnerships. Just living together doesn't count. You need to be either one of those sort of contractual, if you like, arrangements, marriage tax, married or civil partnerships, where if one of you is a non-taxpayer, so earns typically under£12 ,500, and the other is a basic 20 % rate taxpayer, the non-taxpayer can give 10 % of their personal allowance to the taxpayer.

14:27So that is currently a gain. So you're giving about£1 ,250 of your tax-free allowance to your partner that then they don't pay 20 % tax on it. It's a gain of about£250 a year. You can backdate it four years as well, so up to four years. So it can be a gain of over£1 ,000 once you get the backdated payout. It's really lucrative and anyone in that situation should do it. I know you know all that, Andy. I was just catching other people up. So the marriage tax allowance is based on your net adjusted salary. So that is your gross salary after pension contributions and also after any gift aid. so if you're going to creep just above the higher rate tax threshold which suddenly bang you lose that ability for the marriage tax allowance so it's a 250 quid cost a year for you you the easy tactics are i mean i don't get too personal but you know roughly how much you'd be above it um i i don't know at this stage it all depends on what happens next year with like pay rise and stuff so i i don't know at this stage but i mean i'm aware it could be that i get a a small pay rise and I'm, you know, if you could worse off a month, potentially you say it's that cliff edge.

15:38Well, it's exactly that. And it does happen. And the other thing that it's worth remembering that you would also lose, and I don't know if you've got savings, you don't want to, I don't give your personals away when you don't need to on the podcast. But if you've got savings, your personal savings allowance, the amount that you can save without paying tax on it drops from £1 ,000 to£500 a year. So there are two cliff edges there, if you like. So the way to get around that is you could increase your pension contributions through your employer that brings your salary down. So you're just putting the money into your pension so that you're still a basic rate taxpayer.

16:11Or alternatively, you could make a charity donation, you know, and it could be worth it if we take an absurd situation that you're five pounds above the threshold, then by making a six pound donation to charity, just so that we're clearly under it, you know, you could suddenly find yourself gaining a£500 of extra savings interest that's tax free and£250 marriage tax allowance. It'd be the most lucrative charity donation that you've ever made. So yeah, when this happens and you know the numbers, it is absolutely worth you considering doing one of those two options, an increased pension contribution or a donation.

16:45I mean, you'll have to do some sums on it, but it sounds to me like you understand the sums, so that's quite easy. Yeah. And would Would it be, would I, or would we rather sort of inform HMRC, or would they see my salary go up to that level and sort of automatically remove it? Or I want to avoid HMRC sort of, there's enough life admins there is, let's face it, sort of coming after me with a sort of a tax bill. No, no, because that would be your gross income for these purposes. I mean, that's what it would be. You're not a high-rate taxpayer. If you're a pensioner in this circumstance, right, so for everyone to understand, I mean, let's make it simple and say the high rate threshold is£50 ,000.

17:22It's a little above that, but we'll just make the numbers simple. If you earn£52 ,000 a year, but you contribute£2 ,500 a year to your pension by your employer, then your salary for these purposes is£49 ,500 a year. You are a basic rate taxpayer for these purposes. There is no involving anybody. That's just what the situation is. if you see what I mean. Yeah. It's just a fact. Yeah, I'm just trying to work out, when the time does come, what is kind of the process for stopping this so that I don't say I don't end up having to pay. Make sure the pension contribution is coming out straight away so that you're not going to go above that threshold of earning.

18:06That's the key. So you need to, when you get your notification of your pay rise and well done to you and that's all going, you need to then sit there and talk to someone in your payroll department should be able to help you do this and just make sure that your pension contribution is going up. I mean, clearly, the debate, if you were to go up to£65 ,000, for example, then you might be thinking, I don't particularly want to put that much in my pension just for this small gain. But if you're on the cusp level where you're maybe£500,£1 ,000 above the high rate threshold, then it's probably well worth just having that money invested in your pension in order to keep the benefits that you want.

18:39Yeah, definitely. Brilliant. All right, mate. Best of luck to you. Thanks for calling. Could I just say, Martin, I wish I'd kept a tally, but you've probably saved my family thousands of pounds over the years with all of your advice about haggling and energy bills and everything else. So I just want to say a heartfelt thank you to you. Oh, but how very kind of you. I'm British, so I have no way to know how to respond to that. But I am smiling, so thank you. You've got the good work, Martin. Cheers. Cheers, mate. Cheers, Andy. Amidst all that flattery, I just realised I forgot to say, that's the first time you've heard about marriage tax allowance and you're thinking, hold on, we're married and I'm a non-taxpayer and my partner is a taxpayer, my spouse is a taxpayer, we could claim that.

19:17That sounds good. Well, then the way that you claim it is you go to gov.uk and the non-taxpayer makes an application to transfer their allowance to the taxpayer. It is the non-taxpayer who must apply. The taxpayer can't apply to steal their partner's tax-free allowance. And it is almost always a winner. the only slight time it can't be a win, it's going to get really complicated, is if the non-taxpayer is only just a couple of hundred pounds below the threshold where they'd pay tax, which is£12 ,570, and the taxpayer is only just above it, and above it by less than the non-taxpayer is below it, then it may not make you money.

20:01But for most normal circumstances, you know, one of you doesn't work, only earns a few thousand pounds a year. The other one of you works earns 20 30 000 pounds a year it's an absolute winner right what have you got for me next as you know i like to put a fun one in okay and this depends on your definition of fun but go on this one is quite fun and it's something that um i think a lot of people probably do want to know craig has asked what did you have for your tea last night well i'm northern so i'm counting tea as dinner right the evening meal i think that's what's meant by it yeah what okay so So Mrs Money Saving Expert was out and I was in with mini money saving expert, my daughter, last night.

20:41And we were debating what we'd have. It's actually a great time to ask because it was a good virtuous. I made, I had a jacket potato done in the microwave, finished off in the oven. My daughter had a sweet potato done in the microwave, finished off in the oven with some tuna mayonnaise and grated cheese on top and some peas and sweet corn on the side. And, you know, it was really rather good. You know, you can go for all the high fancy food, but I actually, quite good for you and good for my brand because it was actually, you know, quite a money saving dinner on the intention of it. Thank heavens I wasn't out for a posh one, darling, at the Michelin star.

21:19And that is what I had for my tea last night. And I was on daddy duty, so I was making tea and we sat there and then we watched a bit of Modern Family. Oh, very nice. My question is... There's a follow up. I'm not sure you're allowed follow ups. Well, this isn't what I'm going to ask because does a baked potato constitute as dinner or tea? Or is it more of a lunch thing? It was a very, well, you can have it whenever you like. Well, you can. It was a very big baked potato, I need to say. It was a proper, you know, it was a proper serious size and the peas and sweet corn were with it. But we were talking about it and often when it is daddy-daughter dinner, there are treats that are involved.

21:54And I may well be more tempted, you know, to order something in or nip out and go and get something out. and we were talking about all these options then we both looked and went I just want something simple and that's what we came down on and if we want it and if it's nutritional and we happen to eat it at tea time then it's tea Fair enough and you did hit all the food groups as well Yes, I did We did well, thank you I think this is probably the last one, isn't it? Yeah, last one and a good one as well from Frank Will any changes to ICAs in the forthcoming budget be solely on new ISAs or rolled out over existing ones as well?

22:32Very good question. Very important question. And I know many people are worried about it. Now, clearly, I do not know what is in the budget. I haven't been told. And I suspect even the Chancellor herself doesn't know exactly what will be in the budget when it comes on the, what is it, the 26th of November. But there are certainly rumours about a potential cut to the cash ISA allowance. Now, it's very important. It's the cash ISA, not the shares ISA allowance. The reason it is being done, the reason it's being rumoured, and I say rumours, listen, I have had meetings myself where I've been asked about this by senior members of the government.

23:10So it's far more than a rumour. This is a policy actively being under consideration. That doesn't mean it will happen, but it's certainly something that is a realistic possibility. And the idea that they want to do is they want to cut the cash ISO limit, the amount that you can save tax free, in order to encourage people to invest and put more money in stocks and shares. Now, I've spoken before on the podcast about how I think that is absolutely the wrong way to do it. I think it won't work. I think it's a perverse system that if that is your aim, you will simply end up making more savers pay more tax.

23:40And they tell me it isn't to raise revenue. If it were to raise revenue, I could understand it. But if it's to get people to invest, that doesn't work. And I think what we need to do is change culture and education and incentivise young people to invest would be far better. And I should note that there was a Treasury Select Committee report that came out this week saying exactly the same thing, although, to be fair, one of the main quotes on it was quoting me saying it shouldn't happen. And they are also saying that they shouldn't drop the cash ISA allowance. That isn't the right way to encourage stocks and shares investments.

24:07Having done my little bit of caveats there about what's going on, let me answer your question. Everything I have heard is about potentially cutting the amount you are able to put into ISAs in future. I have not heard anyone saying there would be retrospective cuts to the amount that you can have in. The only caveat is I have heard some mild suggestions to an overall lifetime cap on the amount that you could have into ISAs. So, you know, the idea that you couldn't have more than£300 ,000 in a cash ISA. I think that's unlikely to happen. But for those with very, very large amounts, that is the only potential that could change things.