Should we raise state pension age or axe the triple lock?

0:02Lee Boyce: Welcome to This Is Money podcast sponsored by Trading 212. Download the Trading 212 app today and open a cash ISA with promo code TIM to get the 12 month bonus promo rate of 4.56 % terms apply. I'm Georgie Frost and joining me and Simon Lambert today is Lee Boyce. And coming up, when will you get your state pension? The government has reportedly already made its mind up to bring forward the change from 67 to 68 by seven years. We explain what you need to know, plus how to track down your old work pensions and make them work harder for you. Also today, home sellers now face a seven-month wait to exchange.

0:39Lee Boyce: We tell you how to dodge the delays, plus how millions more workers have been pulled into paying higher rates of tax in the past five years. And Simon has taken his SpaceX holiday. day. The pictures look lovely, Simon. Don't forget to stay up to date with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. But first, a review is currently underway to look at when to raise the state pension age. Currently, the official timeline is moving it from 67 to 68 between 2044 and 2046. But all indications are that the government has already made up its mind to increase it seven years ahead of schedule, which will come as a bit of a blow to anyone aged between 49 and 55 hoping to get their state pension at 67.

1:24Lee Boyce: So when will you get yours? Lee, Simon, welcome. Lee, just explain to us the state pension timeline.

1:33Georgie Frost: Yeah, OK, so we've had some changes, obviously, that's gone on in the last couple of decades and lots of those are still being argued about, aka Waspie Women. But there's, at the moment, talks about this state pension age coming forward quicker than was currently scheduled. So the 68 age that you're talking about here, as you say, 2044, 2046 was what is currently scheduled, but it's likely to come forward 2037, 2039. And now that wouldn't come as a huge surprise or a huge shock. And the reason why I say that is because there were two previous studies before when the Conservatives were in power, and they basically chose to ignore them and delayed the decision, the awkward decision, until after the last election.

2:19Georgie Frost: So there were two reports that kind of said that this should happen, and the government is required by law to review the state pension age every six years. One by its in-house actuary and another by an independent expert. And the rumour bill is that they've already made their mind up. The current government have already made their mind up. They're going to peel the plaster off and bring it forward. one of the big reasons for this and what experts are kind of arguing about and this argue rumbles on all of the time is about the triple lock and that the triple lock is becoming very expensive and essentially we're going to have to start moving the age goalposts if the triple lock sticks around because basically we're living longer it's becoming more expensive to maintain then the triple lock is um how much state pension rises by each year so it's either by a consumer price inflation, average earning growth or a minimum of 2.5%.

3:12Georgie Frost: We've had a couple of years where that has raced massively ahead and people are getting a better state pension the here and now, but that puts the future state pension ages up in the air. And there's credible fears, I would suggest, that younger generations could be waiting well into their 70s to take state pension and actually experts have warned that increased funding needed for state pension under the triple lot could mean the retirement age would have to rise to 74 by 2069 and that could come forward even quicker and this is why when we talk on this podcast about the state pension and where the state pension age currently is so it depends when you're born but we've got it that it's risen to 66 to 67 the rises began in april so this has already been pushed back and the other thing i should point out here is that the government has to give 10 years notice so if it is going to push ahead with 68 by 2037 it's going to have to let us know pretty quickly because they have to give 10 years notice but we've already had this slow rise from 66 to 67 which is currently going on and then by april 2028 it will be 67 for everyone by then by the time this is rolled out state pension is currently 12 550 pounds a year if you call a five for the full rate at present and it is a cornerstone for lots of people's retirements and we can go on about saving for private pensions and making sure that you're doing enough to be on track for retirement but the stark reality is a lot of people don't save enough into their private pension and end up leaning very heavily on their state pension and it is also the other thing I would say in my thought process on this as well is if you start talking about you know state pension as you're 74 not all jobs are equal are they georgie you know that the between being a kind of laborer or someone who puts their body through the mill in their working career i mean working until deep into their 60s early 70s is a bit of a different kind of scenario i would argue to people like us who work in offices and don't put our bodies through the kind of same strain and that's if you look through the comment section of this piece of the story that we've done there's lots of people remarking on that.

5:28Georgie Frost: It's a political headache, I would say, because, you know, it's not a great thing for a government to reveal, but they have to make hard choices and things have to change. Otherwise, state pension is just simply going to not exist and it's going to be very difficult to maintain.

5:44Lee Boyce: I was going to make exactly the point that you just made there. When I think of people in their 60s, even early 70s, I'm thinking, young, so young, like my dad is still working, But my dad's a geophysicist. You know, he's not a brickie like his brother, you know. But even then, you know, my mum was a doctor. When she reached retirement, she was emotionally, the stress that you're under for so long is a lot to deal with. And to think that you might have to be working until your mid-70s with that level of pressure and stress for stressful jobs is sort of mind boggling. So what do you do if you haven't sort of saved into your workplace or your private pension?

6:24Georgie Frost: Well, I agree with you, George, and I should actually probably qualify what I said as well. There's some jobs are not equal in terms of if you're not like physically putting your body through strain, you might be putting your brain and your mind through strain. A very stressful, difficult job with potentially really like you're dealing with people in hardship or things that are taking emotional toll. So I should also point out if you're kind of worried about where you're at saving for your private pension, we say this a lot podcast now, George, you have to take control of what you're doing. And that's whether you're starting out in your career in your early 20s, hurtling through your career into your late 20s, 30s, and so on and so forth.

7:03Georgie Frost: It's never too late to start tucking money away. But the earlier you do it, of course, the better retirement you're probably going to have in terms of how much you can save because of the effects of compounding interest. And also, it's a very, very, very tax efficient way to save. and we should be kind of more engaged with our pensions, making sure that it's working hard for you. And as I say, a lot on this podcast, it is up to you to go and crunch the sun, see how you're doing. We have a lot of information on our fingertips. Most workplace pensions have an absolute tonne of information on their websites with forward forecasts and what you can expect.

7:41Georgie Frost: And if you make little tweaks, for example, adding an extra 1%, what that could do for your retirement. And I think news like this just shines a spotlight on it even more because I think there are real credible fears that state pension age is just going to continue to rise. And we're all going to be getting it a lot later than what people get at it now if you are in your 20s, 30s, 40s.

8:07Lee Boyce: I've always said, I've always said, I'll see the state pension as a bonus, but the rest is on me. Simon, what slightly bothers me about this is the sort of the narrative around it, which is, oh, we're living longer. Because while, yes, we're living longer, that has slowed. I think more of the emphasis needs to be on the affordability aspect of this.

8:25Simon Lambert: I think that's a good point. And I also think that what's interesting here is that there are two things going on. The first thing, which stood behind the original rises in state pension age and behind the reason why we have this review going on is because it was set. that we were meant to have the review and everything was life expectancy. Now, life expectancy made some big, big gains. Between 2000 and 2010, male life expectancy went up 1.7 years, female life expectancy by 2.4 years. That's a really big jump, okay? And that was continuing something that had already been happening in the 1990s as well.

9:04Simon Lambert: So it was then looked at and decided, well, well, we should be the state pension age up. Okay, we can't afford this. But then also, as you pointed out, and as Lee talked about, you've got the triple lock. And the triple lock has been added into the mix. And what's driving this at the moment, really, is not life expectancy anymore. Because life expectancy, as you mentioned, it hasn't just slowed, it's actually stagnated. For females, average life expectancy is 83 years. And that's just about managed to get back to pre-pandemic levels, because it fell, you know, during the pandemic. For males, it's 79.1 years.

9:40Simon Lambert: And that's actually slightly higher than during the peak pandemic years. But it's still below 2017 to 2019 level. So that's actually behind. But you've also got this issue of healthy life expectancy. Healthy life expectancy in the UK is about 61. And there's a big, big gap between those two numbers. so whilst we can say well people should be able to work until they're 70 but the average person isn't necessarily going to be healthy enough to work until they're 70 before you even bring in different types of jobs and as you pointed out like i'm sure the three of us could quite easily do our jobs well into our 60s and into our 70s my colleague alex brummer who i sit next to

10:26Lee Boyce: is 77 and his output is unbelievable but will my employer still want me when i'm 77 that's a big

10:33Simon Lambert: question i'm no alex brummer but so the life expectancy isn't driving this anymore what's driving this is the triple lock and there's an intergenerational unfairness issue here potentially because if the pension age rises by more for those of us here so i'm mine was not going to come until 68 anyway i'm after the cutoff point which is a birthday in march 1978 right but if say the government decides to move up our state pension age or the people listening to this podcasts who are younger state pension age by one year or two years well on current costs that's going to cost us 12 500 pounds because the figures show that our life expectancy isn't going up at the other end so we're going to lose 12 and a half grand if they move it up by two years we're going to lose 25 grand what's that paying for that's paying for people to get the triple lock now now in theory the triple lock is actually a good deal for the three of us as well because the more the state pension goes up now, then the more it will compound over the years.

11:34Simon Lambert: And by the time we get it, it will be worth even more money. So actually, in theory, young people gain from the triple lock as well. But in the investment world, if you've got something where the return you're going to get is further into the future, you want a higher return for it because the likelihood of getting that return is reduced. You get certainty in the short term. and certainly when I look at my state pension in 21 years like you say I'm not certain that I'm going to get it I'm pretty sure that I will I don't think they would pull the state pension I don't think they would means test the state pension but you know I wouldn't put it at 100 % certainty so I think there does need to be a genuine look at the triple lock and we probably need to go, do you know what, it's served its purpose and it's time to do something about it.

12:29Simon Lambert: The problem is no politicians are brave enough to do it. But all of those people listening to this podcast who are below a certain age should be willing those politicians on to do it. Because ultimately, if we don't do something, then it's going to cost some of us state pension, whether that's in extra years, or whether it's in a state pension at all.

12:49Lee Boyce: You say there's no stomach. What's your instinct for this next administration? Do we call it administration in the UK? I don't know.

12:57Simon Lambert: I don't know. Let's call it our next Prime Minister, who has been crowned, coronated, whatever you want to call it. The King of the North has been crowned. I think it will be one that would get pushed to the next Parliament. I think this is one where it's almost like, we've talked about this before, it's almost like you need all of the political parts, someone to break ranks, and then everyone to kind of get behind and put it in their manifesto that they're going to have to look at it. I don't think that they would do it in this parliament, but I do think that we need to look at it. But ironically, the only one of the main political parties, what are now called the main political parties, that came out with this was like reform flirted with it.

13:38Simon Lambert: And then they've gone back on that now.

13:39Lee Boyce: Yeah, well, you don't have to put it in the manifesto, you're going to look at it, just don't put it in the manifesto that you're going to keep it. But that's an idea. Simon, Lee was mentioning there about a little bit earlier about basically making sure that you do the most for your own workplace and personal pensions. Something you've been talking about on your investing show with Micah Curry from PensionBee. So just give us a little bit of an insight into the show, but also how things like tracking down old pensions can really help boost your retirement savings.

14:08Simon Lambert: Yeah, this is an interesting one because obviously we talk a lot about how we need to take responsibility for our retirement. And lots of us effectively outsource this to our employer, because if you're employed you're signed up to workplace pension scheme make the most of it pay as much as you can in to get as much as you can from your employer enjoy the tax relief invest it over 40 years and hopefully you'll have a comfortable retirement but what about those old pension pots those old employers that you used to work for and i think there's a lot there's a real lack of knowledge in this kind of thing there's lots of people who just don't really understand how this works i've been asked on more than one occasion by people so are my old work pensions just gone then do they do they still belong to me or are they just gone have they just gone the money gone back to my old employer it's like no they're yours they're in your name they're invested for you um and even people who know that they haven't lost their old work pensions they quite often don't know where they're invested how much money is in them what the fees are i mean effectively they're leaving thousands of pounds lying around.

15:14Simon Lambert: And is that a sensible move? Would you leave thousands of pounds lying around for someone else to potentially take more money off you than you need to? It's, you know, I would say no. So I think it's well worth spending a couple of hours of your time, and this should only take a couple of hours, tracking them down, working out how much you've got in all of them, finding out where they're invested, seeing what the fees are as well, and then considering whether you should move them. You might be able to move them to your new workplace scheme or you might be better off moving them to a self-invested personal pension.

15:48Simon Lambert: And some self-invested personal pensions have very, very low fees. For example, our sponsor of this podcast, Trading 212, it has a new SIP. It has no fees. Now, if you move your money to a SIP that has no fees versus a SIP that has, you know, high fees because you're a legacy customer now and you don't benefit from the lower fees that existing workplace employees do, then that can add up over the years. So basically you need to find your old employers, contact them, ask them for details of the pension scheme, contact the pension scheme, ask them to send you the details of how much you've got in your pension, the fees, everything else.

16:30Simon Lambert: Sit down, get all the numbers together, work out what you should do and should you move them. And there are some good reasons why you might potentially not want to move them. One of which is tied into what we were just talking about. The age at which you can get at your pensions, your workplace or other, you know, defined contribution pensions or SIPs is currently 55. That is about to go up to 57. it could potentially go up to 58 or higher because the original idea was that this would track 10 years behind the state pension age so if that state pension age goes up there is a risk that this happens okay it hasn't continued to track it yet but it could so you could get caught out and not be able to get your money now some older workplace pension schemes come with some valuable guarantees the two main ones are either a protected pension age which means that you might still be able to get your pension of 55 my wife has one of these again try to find out and it is a bit of an admin headache right so you try you go to log in you don't have a login you have to like get another login and then they have to post it to you and you know and all that kind of stuff it is a bit painful i'm not gonna lie but this might prove to be like a very good hourly rate if you boost your retirement but once you get through all of that you know you can check it so we've done this with one of her workplace pensions but i saw in the details says she's got a protected pension age 55 so she can get that when she's 55 so i was like don't move it but what we do need to do is make sure it's invested in a decent fund within this scheme so ideally probably just a really low-cost global tracker fund uh and that you know so you're not paying you know too many fees and we need to know how much is in it and we need to keep track of it the other gap really valuable guarantee you get which tends to be even older like workplace pensions is a guaranteed annuity rates and this is a bit less important now that annuity rates have gone back up but you know when annuity rates are on the floor this mattered more but some some some older pensions will come with a guaranteed annuity rate of like eight percent or something like that and you don't want to be passing that up so do check carefully before you move them screeching sort of

18:48Lee Boyce: U-turn returning back to something you said earlier Simon how can you have a SIP for zero

18:55Simon Lambert: fees that's amazing well I mean there are not no fees at all but there is no monthly or annual account fee on the trading 212 SIP and there is no commission on investing so if you buy and sell shares or ETFs or investment trusts you can't buy funds through trading 212 then you won't pay any commission what you will do is you will pay a small amount in foreign exchange fees although their foreign exchange fees are actually very very competitive compared to almost all of the competitors and there may be some other charges and effectively when with these investment platforms like trading 212 there are others as well that carry no fees they make some money in other places so if you ever do get offered something that is no fees the first thing i would do is look at the small print and find out where they're making money in other places but it's a volume game if you have a very large amount of customers and you charge them a small fee for something i.e foreign exchange fees for example because a lot of people buy us shares you've got to remember that nowadays so just a little bit on that over a very large customer base does add up plus if you've built all of your own technology like trading 212 have done and it's new technology on a new platform rather than legacy technology on an old platform and you don't have the very very large costs that some of the existing really established players do.

20:20Simon Lambert: I mean, if you look at the costs of something like a Hargreaves Lansdowne, they're really high. So they then have to pass those charges on, you know, to customers. And maybe their customers expect a bit more, you know, they dub themselves the waitrose of investing. But if in 40 years time, your pension is going to be bigger, because you went with the Aldi of investing, where the produce is still really good, but it's just a lower price rather than the waitrose of investing, then maybe that's a better idea um what i do know is that if you're going to consolidate your your pensions into a sip and they're pensions that you you weren't really paying any attention to anyway and you didn't really know where they were invested and all those other things then considering moving them to somewhere like the trading 212 sip where there's no account fees and then just consolidating them into one very simple global stock market ETF doesn't look like the worst idea in the world.

21:16Lee Boyce: All right, then. Thank you very much, Simon. Simon and I spoke to Michael Curry from Pension Bee on Investing Unlocked podcast last week. So if you want to get your pension into shape, I do recommend giving that a listen and subscribing so you never miss an episode. Right. If you're looking to sell your home, don't expect things to move particularly quickly. According to new data, the average wait is seven months to exchange. Almost two-thirds of all property sales are now taking longer than six months to go from being put on the market to exchanging contracts. In 2019, it was just 36%. Lee, what's going on here?

21:54Lee Boyce: Where's this data come from?

21:55Georgie Frost: Yeah, it's incredible numbers actually, George, isn't it? How slow it has become to move house. And there's all sorts of reasons why that might be. But first of all, sending a home can be incredibly stressful. So I've just come off the back of selling a home, buying a home. It took longer than the seven months quoted here. It was more like nine months. Part of that was our own doing. We sold our property and then couldn't find anything to buy. It was actually really hard to find something that we wanted to buy. So that part of that can come into play here. So from the listing of a home to exchange, which is that critical point where it's kind of legally binding that you're going to be buying a certain home.

22:32Georgie Frost: And there's reasons why that can happen. But the overall percentage of homes from 36.1 % in 2019 to 60.8 % now is huge. And also in the kind of property process, there's a lot of middlemen. There's a lot of things that go on with solicitors, conveyancers, estate agents. It just feels like there's a lot of cooks. And sometimes in that process, not everyone is pulling in the same direction, which could be an incredibly frustrating process. Again, I speak with recent experience. the amount of times i had to chase up solicitors i had to get updates from uh how the estate agents that we were buying from our estate agents that we were selling with it can get messy and it can be a really like worrying process and actually again talking about my own property house buy and sell right up until a couple of days before we exchanged us buyers were threatening to pull out and we're throwing all their toys in the pram and threatening to pull out and there's no kind of legal process they could be running within their rights to do that yeah and that's why it is such a stressful experience now last month the government did announce a package of reforms to try and speed up the house buying and selling process under the plan sellers and estate agents would have to provide important information up front regarding condition of property chain status and even deed documents that could help this this data i should point out you asked me at the beginning is from 20c which we use quite often they're very good at coming up with this really granular research and data showing what's going on but the crucial thing in here is that in english law nothing's biding about a property transaction until the exchange with signed contracts uh with keys only handed over when the sale completes and that puts a lot of people on the back foot and according to their data uh the seven month national average is made up of around two and a half months uh from listing to sale agreed followed by nearly four and a half months from sale agreed to exchange it's crazy and in scotland which has got a different system the buyer is legally bound at an earlier stage 72 percent of all sales agreed exchange within three months so much faster it seems like a much easier process seems like in england we it's just got messier and messier more and more difficult now we've got some tips in here about how to speed up the process but from phil spencer tv property royalty but it's nothing in here i would say that you probably don't already know if you're selling a home or sold a home before the first thing is acknowledging that your home may not be worth as much as what you hope especially in the current market you know don't let your emotional connection cloud your judgment and when you're setting the price if you list it too high it can torpedo your selling strategy and you might struggle to get viewings and picking the right estate agent as well making sure you get a few different estate agents over and i think i mentioned this before i didn't go with the estate agent value now the home we sold for the highest price nor did i pick the one in the lowest i picked the one in the middle and because it seemed like the correct price and they seemed to know what they were talking about make sure you really get to grips with what your estate agent is like when you're sending how you just remove all the knickknacks photographs parcel items all of that kind of stuff you already know you know potential buyers want to imagine themselves living there But I think selling a home is just a difficult part of the process.

25:52Georgie Frost: But I think the next part of the process is actually more frustrating in a way because it just feels like there is a lot of time taken. And again, I speak from experience. The solicitor that we use felt like they had lots of other property transactions going on. We didn't feel like the priority. It felt like they just had too much on. and it was quite an annoying kind of thing. And the very last thing about their property purchase that I'd like to point out here, that we've done a story on today, actually. Land registry. So we bought our new home in March. I, in June, emailed our solicitor to say, I haven't had the land registry document yet, which basically shows the deans and that you now own the property.

26:39Georgie Frost: The solicitor emailed me back and said that because of COVID delays, still COVID delays for the pandemic. Land registry are still running massively behind and the earliest date that our new purchase would actually be registered is September. So six months. And in the story we've done today, some people are saying it's taken two years and counting to register a new build with the land registry. Massive pack log going on there. You pay all that money in stamp duty. You go through all that process and yet you are still waiting for the day to come through the anniversary. What a messy old business buying and selling a home is, Georgie, I tell you.

27:18Lee Boyce: Isn't it? COVID, though, that is, you know, dear HMRC, I'm afraid COVID. I don't think that would wash, to be honest. Yeah, I don't think it's a legit excuse anymore.

27:29Georgie Frost: No. And we say, you know, keep your records for six years and all that kind of stuff. I think six years after a pandemic is way too long to be using as an excuse. Come on, stop it.

27:40Lee Boyce: Absolutely. I'm still smiling inside when you said get rid of knickknacks because when I look around the home that I bought, I don't know what this says about me, there was like boxes of Viagra dotted around and other sort of sexual paraphernalia. But it was in all other regards, very well kept. No, you know, knickknacks around. It was really clean and tidy apart from the sort of sexual paraphernalia. I don't know if that was a, it worked. I mean, I bought the place.

28:06Georgie Frost: That was a twist in this podcast. That wasn't.

28:09Simon Lambert: Okay. I can potentially match that. When we were endlessly looking at houses to buy in our protracted home move six years ago, I bought a house so long ago that it genuinely was in COVID and mine has actually been registered on the land registry and was done some time ago. They're not still waiting to do it. But anyway, when we were looking around endless numbers of houses pre-COVID as well um we went around to this house it's a nice detached house okay and we went in and it was full of like cabinets with little figurines in them and we had our my daughters with us and like bearing in mind this is quite a while ago so my youngest daughter would have been like seven i think and she said to the lady lady was really lovely it's like you know middle-aged lady in the house my daughter said to her she's like i love your house it's just like a museum and then when the woman showed showed us around the house she then said oh and there's this room here she's like but i have to get a special key for it and we were like oh okay it was like really well locked like there was like one two three four locks on the door you know completely padlocked no georgie it wasn't what you were finding in the room it was a gun room oh my god shotgun room because her husband had shotguns and obviously if you have shotguns and you keep them at home uh for part of your license they have to be like kept in a securely locked room but it was the combo of the the house that looked like a little miniature figurine um museum with the gun room that um was like wow that one really stood out yeah yeah i can i can i can see why i mean i would

29:55Lee Boyce: would just be like, yeah, after my experience, what is behind this door? Anyway, moving on to something slightly more mundane, tax. Let's talk about that, shall we? Because we got some figures out this week showing the true cost of the stealth tax on our money. As a result of the freeze on income tax threshold since 2021, millions more workers have been dragged into higher rate tax plans. And it's not just workers either. Millions of pensioners have been impacted. And the even worse news than that is that the freeze is not planned to end until 2031, a whole decade. And before we start blaming political parties and all that sort of thing, it started under Rishi Sunak and was extended under, I believe, Rachel Reeves.

30:38Lee Boyce: So let's get that out the way first and foremost. But Simon, just what is fiscal drag? How does it work in layman's terms?

30:45Simon Lambert: Well, if you don't move tax thresholds up with inflation and people's wages rise in line with inflation, which broadly they do. Unfortunately, in this country, there was a quite long period of time where they didn't. They are now rising above inflation, but we're not really feeling any richer. If you don't raise tax thresholds with inflation and wages, then you start to drag more people into higher rates of tax or even into tax altogether because we've got the£12 ,570 pounds personal allowance you then move up to higher rate tax of 50 270 pounds and that's the real killer when you drag people from 20 to 40 because all of a sudden they start losing 40 of the next pound that they earn uh there's another one at 100 000 pounds which is where the personal allowance removal kicks in that creates a tax rate of 60 for people and then their tax rate goes back down to 45 once that runs out at just over 125 000 pounds and one of the biggest pieces of fiscal drag, although I don't know if you can really call it fiscal drag, it has been not moving that£100 ,000, but then also combining it with the lowering of the 45p tax threshold by Jeremy Hunt, who dropped that from£150 ,000 after it was briefly abolished by the economic geniuses that are Liz Truss and Quasi Quarteng.

32:08Simon Lambert: So the sum total of this is basically lots of us are paying a lot more tax and losing more of the next pound that we earn and our pay rises and if you combine more people losing 40 percent of their pay rise of 60 percent of their pay rise 45 percent of their pay rise with the fact that wages didn't go up with inflation for many years and then have finally started to go up with inflation but inflation has been so high that most people don't feel they're getting any richer, you create a problem. And the thing about fiscal drag is it's a neat tax trick, but you can only really pull it off for a certain amount of time before people start to notice.

32:54Simon Lambert: And when they do start to notice, they start to get really angry about it. And they started noticing quite a long time ago.

33:04Lee Boyce: I'm trying to sort of look at the statistics here. Lee, am I right in thinking that by the end of this freeze, a quarter of income taxpayers will be paying the higher rate, which to me sort of, again, we've said this before, defeats the purpose of the higher rate. It's sort of supposed to be for the really, really wealthy. And now we're dragging in nurses and teachers and all sorts of things into this band.

33:30Georgie Frost: Yeah, it's crazy. Actually, the projection here that we got this week from HMRC is that the number of additional rate taxpayers has increased from half a million in 2021-22 to a projected 1.29 million in the current financial year. You are correct. I would say that, I don't know about a quarter, I can't remember off the top of my head, but it is a lot more people that are getting caught in this net. And actually, Mariana Hunt of the United States said, high rate taxpayers are no longer a small group of top earners. Because of frozen tax thresholds, millions of workers bring home what probably feels like a relatively normal income and our paying rates of tax that would once have been reserved for much higher earners.

34:09Georgie Frost: And I think there is a real, real feeling about this. And I think we've been talking about this for many years now, George, and we kept saying this is a kind of one of those things that bubbling away that start grabbing more and more people into the net and more and more people will get angry about it. and actually get more figures in there 2021-22 income tax rating 226 billion for the treasury uh the projected this year 347 billion that's an extra 121 billion um in income tax and we're feeling it i think we're feeling it in uh our wage packets and it just it doesn't feel like we're earning um as much as what we should be earning and actually uh some aj bell figures they crunched numbers on this and we've crunched these numbers numerous times but if the higher rate threshold arisen with inflation since 2021 2022 the 40 tax ban would kick in at a salary level of 69 504 pounds that's a yeah wow massive massive difference uh between where it's at now and i think a lot of people that are earning over that 50 grand 50 270 pound threshold you know are kind of really feeling it.

35:21Georgie Frost: You might be doing well in your career and moving out the ladder and then, bosh, here you go, you're straight into that 40 % tax ban and it's not really great, is it, the fiscal drag effect?

35:31Lee Boyce: Well, it's not. And Lee, taking us back to an earlier conversation we had about the state pension, aren't we currently around£12 ,540 something, which is only about 20-odd quid below the actual personal allowance? So from next year, immediately, your state pension is taxable income.

35:51Georgie Frost: Well, if you're on full state pension, that's right. And actually, again, there was another... There's been so much news, Georgia. It's been really annoying. Summer, we don't want news. The poor news, I think. Why is there so much news? As a result of that, seven in 10 pensioners are now paying income tax. That's what later data was showing us. So, you know, you're right. That's exactly what's going on. I think it's a crazy system. I don't know what happens next. I mean, this freeze, both parties are responsible for this, you know, bringing this in in 2021. And then that kind of freeze that was for, I think, three or four years, whatever it was.

36:25Georgie Frost: And it's been extended. You know, that's a whole decade in which I would argue that we are going to be feeling poorer. And it goes back to the argument of, you know, hard work should mean that you prosper and see your wealth grow. Not have, you know, more of it clawed away and taken away by tax. And yet here we are in a position which it looks like there's going to be a bigger lurch to left with Labour and the Prime Minister and more tax rates are to come. How much more tax can we take, Georgie, you know, before people really do just start getting completely fed up? I think you already feel it now.

37:00Georgie Frost: You only have to look around social media and people saying, does that want to work too hard? Don't really want to climb up the career ladder because it's just tax, tax, tax. And it's very demoralizing. And I think it hits productivity. I think it hits everywhere. and I just I don't know what happens next. I think it's a very long time, enough of five years of frozen tax thresholds. By that time I don't know what that 69 ,504 figure will look like but it's going to be quite considerably more than that I'd imagine. Yet here we are being a high rate taxpayer is basically becoming the norm which is extraordinary.

37:36Lee Boyce: And it's not just Simon, it's not just income tax is it i think the inheritance tax thresholds have stayed the same since 2009 i think student loan has been frozen as well threshold yeah it's all kinds of things also

37:49Simon Lambert: it starts to interact with other stuff as well for example it interacts with um savings and capital gains tax so for example your capital gains you have your profits added on to your income and then you're taxed at you know the highest rate of your income so for lots of people it's shifted up their capital gains as well and that's at a time when rates have gone up and the allowance has fallen in the savings as well it means um more people only get 500 pound personal savings allowance and more people are getting zero because they're additional rate taxpayers to be honest i think it needs to stop i think we need to just stand up and go do you know what it's happened up until this point we're not gonna do anything about what happened in the past we're gonna change it from now i think it should change from the next tax year that's what i'd like to see the new government do.

38:31Lee Boyce: Right. Thank you, Simon. Finally, bad news for Elon. Good news for Simon. SpaceX shares dropped below the IPO this week with warnings of more volatility to come. But our Simon had already cut and run off on holiday with his earnings from selling out early. Simon.

38:49Simon Lambert: Yes. So this is just a really quick recap for listeners, because I talked about this before, just after the SpaceX float. I did buy some SpaceX shares in the IPO. I then sold out of them really, really quickly. And I managed to bank a£640 profit. And I had said to myself, this is absolutely the opposite of what you should normally do when you're investing, just to be clear. This was effectively a gamble, a trade. And I said to myself, I was going to do it. I was going to sell out if I made£500 and I was going to use that to pay for me and my wife to go away for the weekend. Obviously, we can't go away for£500 between the two of us, but it would pay for a big chunk of it.

39:25Simon Lambert: We had a weekend to ourselves coming up. We were going to do something in the UK. I was like, well, if I can make some money, we could go overseas. We'd go abroad. So I banked£640 profit and then I was away last weekend. And Helen said to me, she was like, is that your Elon Musk holiday? And I was like, yes. So she's like, you should talk about that. So here I am saying, yes, I did actually use the money, as I said I was going to do, to go away for the weekend. And here's the scores on the doors, okay? We went to a place called Bigur in the Costa Brava, which is really nice. And we paid£203 for flights.

40:02Simon Lambert: We paid£50 for a hire car and£700 for a hotel for three nights. So that's a total cost of£953. I made£640 thanks to SpaceX. So it cost me£313 of my own money in total. That was the actual cost. So thank you, Elon. I'm not always your biggest fan, but I really do appreciate the weekend away. And it looks like selling out of those shares was a good idea because they're now down below the IPO price. Simon's stat of the week, 13 years. That is the level at which Ocado shares are at in terms of a low. They fell again this week to their lowest level since 2013 as it failed to convince investors it was making sufficient progress with its warehouse tech division and international expansion.

40:58Simon Lambert: Ocado has been one of those great hope stocks in the UK and it's had a real rollercoaster ride. Sometimes it's been up by huge amounts and sometimes it has not. and this is very much a kind of growth share and a hope for the future one and it illustrates how you can get caught out by these because the shares are now down at their 2013 level so if you'd have invested at any point since 2013 you would now be losing money.

41:27Lee Boyce: All right then Simon thank you very much thank you very much Lee and thank you for listening you can keep up to date with the latest breaking money news just go to thisismoney.co.uk or download the app and if you have any comments or questions of steam or anything you'd like them to look into simon uh

41:41Simon Lambert: you can email us at podcast at this is money.co.uk and come to this is money.co.uk forward slash podcast to find all podcasts past join the debate and read your comments and we will chuck our state pension age calculator in the podcast article this week for you to find super and if you like

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