What is revenge saving and could it help you build up a pot of cash?

0:03Lee Boyce: Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Lee Boyce. And coming up, what on earth is revenge saving and why are more of us doing it? We'll look at the latest social media money trend. But hang on, actually, we're meant to forget about revenge saving and use a mind trick saving method instead to build a healthy pot of cash. all will become clear, I hope. Meanwhile, we look at the little-known government savings account that has seen£220 million paid out in bonus payments. Could you benefit from opening one? And a current account with a 6 % savings rate, but it'll set you back a whopping£17 a month.

0:45Lee Boyce: Is it worth it? Also today, HMRC can now take money directly from your bank account or ISA if If you haven't paid your taxes, can't see any problems there. Nationwide offers a bumper cash bonus for current account switchers. And why won't I get my state pension on my 66th birthday? Pensions agony uncle Steve Webb answers your questions. Don't forget to get you up to date with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. But first, a message from our sponsors. You've probably heard Lisa Kaplan from Charles Stanley Direct on this podcast, sharing her brilliant financial tips.

1:21Lee Boyce: Well, now it's your turn. With Charles Stanley Direct's financial coaching service, you can speak to Lisa or one of her expert team one-to-one about your own money questions. No jargon, no pressure, just clear practical guidance. And the best bit, you can start with a free 15 minute call. Just head to charles-stanley.co.uk forward slash financial coaching. Go on, why not get answers from the experts you already trust. Remember, investment involves risk. Now back to today's episode. So there's a new money trend on social media. A savings method that is gaining popularity is a way to budget and take control of your finances.

2:00Lee Boyce: But, and the clue is in the title, revenge spending goes a step further than just carefully tracking your money moves. So Lee, what is this all about? Revenge? Who are we taking revenge on Lee by saving?

2:16Georgie Frost: what is it why is it called that it sounds a bit like uh i kind of when i when i first saw this i felt like it was a bit kill bill you know when it feels like it's like someone that's going around sort of like revenge saving it passes the test of what is that uh which is why we wrote this which is why we wrote a story on it so it is a social media phenomenon it started in china it went over to sort of the us and now it's kind of reared its head in the uk and a lot of uh kind of forums like reddit and places like that where people like to swap tips um you know the community-led kind of boards type thing now i still don't fully know why it's called revenge saving but there is there is a bit of a method behind the madness because if we go back to the pandemic do you remember when people were building up lockdown savings pots because you weren't able you weren't able to go out uh spend money you might have saved money on your commute all of those kind of things but the people were building up quite a healthy pot of cash it created quite a big savings habit for a lot of people when the lockdowns ended lots of people rushed to the shops and out and about to spend the cash they saved and the phenomenon was called revenge spending so that's where this has this is where the roots have come in from this revenge saving is the kind of opposite of that it's right actually you can go and do all these things now you can go to the shops you know buy impulse purchases and all of those kind of things uh but you don't because you're not spending it you're saving it so it's like extreme savings uh essentially so it's like going through challenges like the no buy challenge so the no buy challenge is when you don't go to the supermarket for a month and you just use absolutely everything um you've got in the cupboards for example you you don't spend any of your money which is a good idea anyway isn't it good idea and it can help you just get that little pot of cash uh look like get you started into the savings habit um and then you can go into more kind of like granular things like you know the 1p challenge for example you save a penny uh on day one and a penny every day and then at the end of the year you end up with 667 pounds 95 pence uh very precisely um people do quite like doing these kind of things because i listen revenge saving to me is like you think oh it's just another buzz term like what on earth is it all about but anything that encourages people to save and if it takes getting into that kind of group mindset where you're sharing money tips potentially with other people in forums and things and you're geeing each other up to save more money i think is a good thing because it can be hard to to get started um we're kind of in a in a period of high inflation again um you know it's back up to 3.8 percent you can still beat inflation with the very best savings accounts but i would argue that this prevents anything will be probably people that are starting out on the savings journey and not really thinking too much about beating inflation.

5:24Georgie Frost: It's more about getting in the habit. It's more about getting that pot built up. And I think that's where this revenge saving kind of idea comes from.

5:33Lee Boyce: I know, Lee, you said that this is, you know, some people could argue this is just another little gimmicky thing. It is. It is really. I mean, revenge saving. It's just basically, I would call it social saving. Why not? But I agree with you. And certainly if it's people saving for the first time, but actually I think this benefits people who have actually probably got into kind of a rut with their finances. You know, there's a lot of talk about budget speculation, you know, cost of living, all these sorts of things coming down the line. The economy is a bit of a mess at the moment, both here and abroad.

6:10Lee Boyce: And I think people are just wanting to take a little bit of control back. It doesn't have to be a first time. I think a lot of people, don't they, just get into this habit. And sometimes some of these challenges, I have a spend january which is actually not a bad time to do a no spend month because well no one wants to go in january unfortunately it's my birth and you probably put a stone on over uh december anyway so it's but it's anything it's like a kick start to hopefully a better better relationship with money and sometimes just having that kind of shock therapy of a couple of you know savings challenges it's actually a really good thing and we know that when you have accountability when you have for anything, whether that's losing weight, this can be a good thing.

6:51Lee Boyce: However, Lee, I have to say, on your website, beyond this article explaining what revenge saving is, and perhaps we should all just go jump on TikTok and have a wee look too, but your savings reporter, Helen Coran, actually tells us to forget about revenge saving. So now we know what it is, we've now got to forget about it, because apparently we're to use a mind trick saving method to build a healthy pot of cash instead lee what's this about okay i'm going to explain from top to bottom here right so

7:21Georgie Frost: we got the request at the start of the week to write something about revenge saving because it was uh kind of getting so much traction on social media so we wanted to do a story just explaining kind of what it is i sat down with helen you know i used to be savings reporter back in the day it still has a place in my heart i still care deeply about the saving the world of saving and banking i just can't help it i can't help myself georgie so i sat down and i said i think what a lot of this boils down to is again thinking about people that don't save money or have done in the past but haven't for a while i kind of was like what how about if we did a piece this sort of explaining the kind of traps that people get into the kind of things that people say i don't save because of this now of course the number one thing i would argue is feeling that you don't have enough money at the end of the week at the end of the month uh to put it away but you know even if you put away five pounds a week ten pounds a week um it does snowball so for example if you put ten pounds a week of course you're going to have 520 quid at the end of the year it becomes a bit of addictive then that 520 pounds you might be able to do the same thing again for another year or you might be able to just ramp it up to 15 pounds and then you're seeing that all of a sudden it's ticking over the into four figures and then i think trying to get into that i don't have enough money to save even if it's just a couple of quid even if it's the roundup features uh or some of the banks have now where it just goes into a little savings pot it's a good habit to get into and i just think a lot of people go i just i haven't got enough money to save i think the next thing that a lot of people will say so this is helen and i we were just sitting down the street of of what people i think the mindset which is where this kind of like mind trick method we were just all at something a bit catchy right is interest it's just thinking well savings rates aren't worth it i've had this conversation so many times over the years with friends savings rates are just rubbish they're not worth it and listen again i get it you know you might be an investor instead i always think it's good to do both to be an investor and a saver um you know just because of the long-term effects of investing typically beats saving over the long term and especially in times of inflation and currently where inflation sat but rates were actually pretty good uh and peaked in october 2023 uh you could get easy access for five point at 5.2 percent they've dipped away since uh and you're talking more like 4.3 percent on easy access but it doesn't matter i would just ignore interest i wouldn't even really think about it if you're starting from the beginning because of course if you are sticking away 10 pounds a week in this example over the course of the year the amount of interest that you're going to earn is going to be minuscule it's it's not worth thinking about so just get that out of your mind and then it's like visualizing the snowball of that pot of cash right so if you think about your pot of cash at the top of the mountains there's a tiny little pea but as you roll it down the hill the snowball gets bigger and bigger and bigger and visualizing it like that i think can help make you go okay i am starting at 10 pounds a week and then when you do get over to the year and you're at that kind of more and it's snowballed and then you're getting more money in there then interest does start to kind of have an effect um i think is is it is a good way to think about it and as i alluded did it earlier i think just automating it is is a good idea so just setting up a direct debit and we were having this conversation in the office the other day simon was explaining how he's got a savings account that he's kind of locked himself out of uh almost on purpose uh rachel was saying that basically um she's got a nice uh bank but she's got no online access uh to it on purpose uh and she just goes into the branch once a year to make sort of make sure that the rates doing all right um it just doesn't touch it and it is that kind of mentality sometimes because if it is an easy reach um you might be tempted to tap into it but i think any way that you can get into the habit or you can try and convince someone to get into the habit of saving is a good thing but it is just getting yourself out of the mindset of thinking i don't have enough money to save the interest rates aren't worth it and just getting on with it automate it

11:47Lee Boyce: I couldn't agree with you more, Lee. Whenever I talk about savings and how I first sort of started, and this goes back because I'm talking about coins and the paper stuff that you hold. Well, it was a lot easier back in those days. And so I just, I had, I felt I had no money and I really didn't. I wasn't paid very much at all. But every time I got some loose change, and I know you can get apps for this nowadays, I would stick it in one of those ceramic pots. again it's that thing you can't get access to unless you smash the pot i accidentally dropped it uh in the end but when i accidentally dropped it um there was about 350 quid in there and i thought well that was easy and it's just that confidence that belief that actually and and whether that's physical or mental it's the same thing it's about trying to make something very frictionless make it very easy to do make it feel like you're not taking away from the quality of your life otherwise you are not going to sustain it and then keeping it somewhere where you're going to have to do some sort of action to get it out exactly yeah and i think that's what that's

12:51Georgie Frost: what kind of science i'm gonna make you that that was the equivalent of the piggy bank that you had to smash actually georgie from the desk i'm sitting at right now i can see uh the piggy bank that you bought my firstborn uh which is still getting money dropped into it now and you've made me kind of want to go smash it open and see what's in there right but i should say something which

13:11Simon Lambert: is that sadly i do not still have that savings account that i can't get into that that was that was that was long ago yeah i had a hundred pound a month going into it and it was basically back in a kind of much earlier days of online banking and i needed about three different things to get into it and i could never remember all three of them at the same time and every time you reset your password they had to send you a letter so that was that was where the friction came in for me was was the letter and and then it would just go around in circles but the one mistake that i must admit i have made over my financial life is i'm really whilst i'm really good at telling people they should automate their savings i'm really bad at automating my own savings and i rely on doing it manually and i had this with an investment with my investment isa basically due to my provider won't let me do choose the day that the money comes out so i ended up in this kind of situation where I'd get paid and then the money would come out two weeks later so what I was having to do was shuffle money around put it into one account then put it back and everything it was causing me problems so I cancelled the regular payment and what I should have done is I should have switched to a different investment platform that was more flexible and allowed me to do it and make it frictionless and if I was doing that I'd still have I'd have had money every month going into my isa and as it is because i don't do that i don't have money every month going into my isa have money going into my isa in lump on lumpy occasions when i remember so that would be my one tip off the back of what we were saying was like automate it and if you can't automate it you find somewhere that you can automate it there is a lot of different savings providers in investment platforms out there nowadays that you can increase the flexibility so do that basically.

14:57Lee Boyce: Simon, sticking with savings and hundreds of thousands of low-income savers who put away money in a government savings scheme have received more than 220 million in bonus payments since 2018. Now, over half a million customers have opened a government help to save account since the scheme was launched, paying almost 600 million into their savings pots. Now, you can tuck away up to 50 quid a month and you can get a 25 pound government top up. the scheme was due to come to an end actually in september 2023 but has now been extended to april 2027 so could you benefit simon help to save something we've heard a lot about but i'm not sure we've gone into much depth about it on the podcast so what is it how does it work why was it going to be ended why is it extended why were they even going to stop it at all right you

15:44Simon Lambert: can open a help to save account if you're receiving universal credit and you had take-home pay of one pound or more in your last monthly assessment period uh to claim universal credit you must be under the state pension age and have 16 000 pounds or less in money savings and investments and you might be eligible if you're out of work you're working part-time or self-employed if you're unable to work and it's basically the support scheme for people on low incomes now i think that this helped save scheme which not many people know about is actually a really good idea and we've talked about this before we talked about this in a bit of depth um i think it's probably like six months ago there was a couple of reports that came out about trying to help people build rainy day savings pots in the same way to go back to my point i just made that we make it easy for people to save pension pots through auto enrollment and the great thing about auto enrollment is you're enrolled into the pension unless you opt out most people don't opt out it's massively increased number of people who are saving into a pension but then the other really good bit is the money comes out of your bank account sorry the money doesn't come out of your bank account and rely on you doing it the money comes out of your wages when you get paid so your pension is totally automatic now the one thing i am doing every month which i'm not doing with my isa is i'm saving is my workplace pension and i've been doing that for nearly 20 years now because just after i started this is money i signed up to the pension scheme and every month it's just been doing the same thing now i've done some kind of fiddling around with the funds i probably would have done better if i just stayed in the default fund like the the global stock market tracker and not try to be clever but none of that really matters what really matters is that every single month for nearly 20 years me and my employer and the tax man who's been bumping up payments by 25 to cover basic rate tax relief have been putting some money into my pension every month which is where i would say schemes like help to save all those ideas around helping people to build up a rainy day pot through work and again it's harder if you're self-employed you've got to take the onus is on you if you're self-employed to do this right and we need to work out how we help self-employed people to do this but if you do that and you do that every month then you can build up a surprising pot and going back to my savings account i was locked out of by the time i managed to get into that i had just under three thousand pounds that was how long i couldn't get into that savings account for i mean i obviously was trying to save some money so i wasn't trying too hard but yeah it was great and it was like great i have built up quite a good little pot here

18:37Lee Boyce: so lee what do you reckon to schemes like help to save i think the help to save ones uh really good

18:44Georgie Frost: because it goes back to the point we were making about getting in the habit uh about having a low pots i mean the stats that the government put out this week suggests that those who have opened the health safe account 94 deposited the maximum amount into the nest egg each month for 50 pounds and the lure is obviously that you are going to be getting that doubled in the form of interest that you get paid by the government obviously if you're on universal credit you are potentially struggling and it might feel completely unattainable to have a savings pot i think that this scheme is a good one and that's why i was quite surprised i think when maybe when we did speak about this before about six months ago and it was kind of like you know we need to be encouraging uh low income households to save us kind of think but you've already got a kind of scheme that does that and actually again when i saw these stats uh this week i was surprised how just how many people have them i mean over half a million uh people have a helped save account of open one since it was launched in september 2018 uh paying in almost 600 million pounds so listen again anything that gets people in the same habit Georgie I'm all for it I guess what I'd like to know and actually probably what I will ask the government is once that's done so once the four years is up um what happens to the money uh and you know I think the next step would be having a bit of free uh financial coaching or a bit of time to be like okay you've now built up this pot here's what you should do with it next don't know what the the follow-up steps are to it um but I'd be interested to know and I'll go away and find out.

20:21Lee Boyce: I'm going to say something controversially. Having just read a lot of the kind of MPs concerns over the lifetime ISA and the fact that 87 % of people who bought using one said they didn't actually need it anyway. I am much more in favour of my taxpayer money going to help people to save, to get into that habit, these sorts of schemes than I am to help 87 % of people who don't actually need the help to get on the property ladder using your life. and to go into...

20:48Georgie Frost: Don't go there. Don't go into lifetime ices. Oh, I don't know. How do you start?

20:55Lee Boyce: It's more about saving for rainy day, I think is what we really need to encourage. You know, saving for properties is a couple of steps beyond that. Isn't it better that we try and get those, I don't even know, some horrible statistics about how few people have just any sort of emergency savings. That's surely where we should be focusing our attention.

21:15Simon Lambert: what will you mean rather than encouraging them to save into an account where they can't get the money out without like a massive penalty i mean yeah or obvs as they say look the lifetime iso is one of the without going down the lifetime iso rabbit hole okay it's one of those it's one of those financial products that right you zoom out on a big level it's a bad idea right it i mean it smacks of something that was designed on the back of a cigarette packet right but on the individual level it can be a great deal if you are genuinely saving for your first property and you haven't bought a property and you're going to do it why wouldn't you do that why wouldn't you put money in there you can't get an instant 25 uplift on your money many places you can get it in a lifetime isa and you can get it in a pension so overall bad idea but if you're listening to this and you are a wannabe first-time buyer and you're saving for a home put your money in a lifetime isa and take full advantage of that bonus because you don't get that kind of deal many places but you obviously you need to be make sure that you're buying a house that's worth below the threshold and all those other things so go read our guide to lifetime isas and that but it's just one of those interesting things whereas the help to save thing macro zoom out level yeah it's quite a good idea individual level yeah this is quite a good idea it's like it's probably the best help too of anything of like the of the from their back in the help to boom right where where there was help to this and help to that coming around left right left and center because let's remember the lifetime isa that was a replacement wasn't it for the help to buy isa what was it called that was was that what it's called yeah help to buy we're meant to know this stuff right it's like it's our job and we're like uh was there a helps by isa or did i just make that up um anyway yeah so like the save was was the best of the the help to sweet or whatever you want to call it to round off our

23:14Lee Boyce: savings first half santander has launched a new current account with a range of perks called edge explorer now one of the biggest draws of the new santander account is a chunky six percently linked edge saver easy access account that it comes with now the downside of this whole account a monthly fee of 17 pounds or 204 pounds a year for the privilege of keeping it lee firstly what do you get with this account and is it worth it so there's been a bit of a movement around career

23:47Georgie Frost: accounts uh in the last couple of weeks uh including bonuses and things that are being paid out which we'll mention the nationwide account in a sec but this Santander account as you say 17 pounds a month 204 pounds a year there are other accounts that are on the market that cost roughly this amount and I think banks are seeing it as a way of trying to hook in customers who want something extra from their current account a current account that does more things you can earn up to 20 pounds cash back uh with this account um Santander actually axed the cash back on its edge account in May but with that£17 fee if you manage to make the most of that cash back of course it's just£3 a month that that then fizzles down to but that 6 % account is pretty good you can't beat that anywhere else but there's a massive caveat to that you can only stick up to£4 ,000 into the rate.

24:48Georgie Frost: But if you did have£3 ,400 in that account, you would earn the equivalent of£17 per month interest. So basically, you could cover the cost of this account by holding that much money in the current account with that rate and take advantage of the 1 % cash back, which is up to£10 a month on eligible debit card spending and up to£10 pounds per month on eligible household bills paid by direct debit which is where that 20 pound element comes in the other interesting thing about this as well and which is a part that does come with a fair few accounts now is the worldwide family insurance and actually this one's a little bit different because it comes with winter sports cover which might be of interest uh to people that simon of simon exactly yeah it might be a good one for simon um if he can figure out how to unlock his current account and get in there and potentially switch it uh which i think is is is pretty good um you know in terms of if you're going to take take advantage of that and actually make it work you know it could be a good thing to do uh there's also breakdown cover uh and mobile phone cover and also access to 24 7 online gp services now that 24 7 gp services line is what and I'm seeing a lot in accounts at the moment, there's been a big push.

26:09Georgie Frost: It feels like people are kind of fed up with their local doctor surgery and rather just get quick answers by services like this. But I keep thinking, if loads of people are using this, isn't it just going to block the 24-7 GP access and probably just end up in the same boat that we're in? We've all gone to our online GP services and now we've blocked that up as well. But you have to go and crunch away the maths on this. And if it's going to work for you, it's going to work for you. As I say, if you are a family that goes on a winter ski trip, this probably is worth a look. But as everything, you've got to check those terms and conditions and make sure it's going to be fully covering you.

26:48Georgie Frost: The other current account I'll just quickly mention, just because it is just so popular, and the amount of people that read this story was absolutely crackers, is that Nationwide is£175 to switch for the current account switching service. you can switch the flex direct uh flex plus or flex account uh new flex direct customers get one percent cash back on debit cards burning for 12 months um this is vastly popular and also you might be you're likely to be eligible for a fair share payment if there is another one um the fair share payment yeah the fair share payment is is the um the bonus that is paid in the last three years to nationwide customers uh as part of the fact that it's been making pretty healthy profits and sharing sharing the love georgie to its customers but you're going to make sure that you've got the right amount of money in there for example and again all about reading those t's and c's um but it's it's a very very popular account switch to um and quite a bit simpler than getting your head around the sand sound air one but i would say weigh up all your options because it is easy to just go and chase this easy cash and i think i've mentioned this on the podcast before i have a secondary bank account and i use the current account switching service uh to switch that secondary account uh around so i have my main account where bills are paid my salary is paid i have a secondary account for the purpose of I use it sometimes for like holiday spending might stick a couple hundred quid in there so I know what's there trying to budget with it but I also use it to use to utilize these switching bonuses because I don't really want to do it for my main account but for my secondary account I'm happy but there are quite often hoops you've got to jump to ensure that you get that payout so for example or this nationwide you've got to have two active direct debits set up on it you can expect the payment relatively swiftly these days but you you'll need a thousand pounds deposited in the account and to make a debit card payment within 31 days of opening it so if you could tick all those boxes uh it's worth doing um i tend to with that secondary account switching i don't tend to do the ones where you've got to do uh set up the active direct debits um which is what a lot of them do do now so make sure we play by the rules you get your power and also make sure that it

29:16Lee Boyce: serves what you want it for don't just go running after the money and find out that actually this is just a it's not going to serve you well simon yeah on that note like with things like free

29:29Simon Lambert: winter sports insurance i'd check check the winter sports insurance check what's covered because there's winter sports insurance and there's winter sports insurance like are you what do you mean by that simon okay so basically are you covered if you're off piste right so most insurers won't go you feel like out of bounds but if you're like if you get injured on like a bit in just by the side of the piece kind of stuff like stuff that's in the resort some some policies will might not pay out others might not pay out how much does it cover for injury getting off the mountain if something happens if anything gets stolen all that kind of stuff sounds quite adventurous though doesn't it the edge explorer account it's a bit like it's quite action sports also sounds a little bit like the kind of thing that someone writes to one of those newspaper agony on sex columns about my partner my partner wants us to become edge explorers but i'm not quite sure whether we should

30:21Lee Boyce: that's it for part one i think that might be the funniest thing that's we said on the podcast

30:28Simon Lambert: I knew that I'd get you. I knew that I'd get you. I just thought of it while you were talking. I was like, that's going to get them.

30:39Simon Lambert: I'm joined now by Rob Morgan of Charles Stanley Direct for our weekly Investing Explained feature. Rob, I've got a question here from a listener. I'm a higher rate taxpayer and have been saving £300 a month into my work pension. I don't do a tax return. So how can I make sure I get higher rate tax relief on my contributions?

30:58Georgie Frost: Yes, it's a good question, Simon. And it's very relevant, I think, as pension contributions are a priority for lots more people finding themselves paying those higher rates of tax. Now, with a personal pension, such as a SIP, you get basic rate tax relief of 20 % added automatically, and you can claim back any higher rate relief. So a further 20 % on top in the case of higher rate tax. However, your work pension may be set up in such a way that you get all the tax relief upfront anyway. With salary sacrifice or net pay arrangements, all the tax relief, including higher and additional rate, is automatic.

31:36Georgie Frost: And that's because these arrangements have the effect of diverting part of your salary into the pension. Similarly, with any defined benefits pension, such as a final salary scheme, there's usually no high rate relief to be claimed back because contributions are made from gross rather than net pay. So first, check how your pension scheme operates with your HR or payroll department, if you're not sure. But if your scheme is what's known as relief at source, and you do need to claim high rate relief yourself, don't worry. It's reasonably easy to get it sorted and receive a rebate either through a self-assessment tax return, or there is now a dedicated HMRC online tool for claiming pension tax relief on the gov.uk website, thereby avoiding the tax return process for those with no other tax or reliefs to declare.

32:23Georgie Frost: Thank you very much, Rob.

32:26Lee Boyce: Welcome back. In the latest what could possibly go wrong moved by the government, HMRC now has the power to take money directly from your bank account if you haven't paid a tax bill. This includes funds held in cash ISIS. Now, this scheme known as Direct Recovery of Debt, or DRD, was launched in 2015 but paused during the COVID pandemic. Now, HMRC has officially relaunched it in what it calls a test and learn phase after being given the power to do so by the Chancellor in the spring statement in March. So Simon, nervous about coming back to you now. Where will this go? Who knows? But, you know, what could possibly go wrong here?

33:06Lee Boyce: Just explain to us how will this actually work and what is a test and learn stage when it's at home?

33:13Simon Lambert: i mean what could possibly go wrong here well as part of a you know a properly functioning tax system one of the key elements is that people need to think that a tax is fair right and that they are being treated fairly i'm not sure that this fits with that whole vibe um there's good people reading the this story are horrified i had a conversation with um one of the news editors on on the daily mail yesterday she was like i'm just still reeling from the fact that hmrc could come into my bank account and take my money um anyway they won't just do that all right so the way this works is taxpayers will receive a visit from hmrc agents before any money is taken from their bank account they will identify the taxpayer confirm it's their debt and discuss options for repayment the rules state that taxpayer must be left with at least five thousand pounds in their account to enable them to cover essential expenses.

34:08Simon Lambert: 30-day time frame for tax appeals, which must also have passed before HMRC can raid someone's account. Anybody who's identified as vulnerable won't be targeted. Anyway, tax experts have said, no, not, not OK, not cool. Dawn Register, a tax dispute resolution partner, advisory firm BDO, said, given the pressure on public finances, it's clear that HMRC is determined to get tougher on those who can pay but don't pay. The relaunch of this draconian power underlines how important it is not to stick your head in the sand and ignore HMRC demands. So if you owe tax and you're ignoring them, then they can come and take it off you.

34:45Simon Lambert: The problem is, is quite often people don't agree with the tax that they are being told that they owe. And anybody who has ever done a tax return will know that you put in a lot of numbers and then it spits out that you owe x amount and then it shows you were working that quite often makes no sense to you whatsoever i am often puzzled by how much tax i owe hmrc particularly as all of my earnings are paye i'm like but you've already taken it off me how can i owe you that much and there's all kinds of craziness that goes on with your tax return you can't you know as everybody knows you know you can't really phone the tax man and talk to anyone and actually maybe you can phone the tax man and talk to someone it's just they've got to the point where there's so few people phoning them because they don't think that they'll ever be able to get through to someone to speak to them that you could now actually ring them so if you do need to ring them do try it's possible that so many people have given up on it that you can actually speak to someone and then you see a story about this i would say that right maybe there is a reason for this power maybe that it is a good thing maybe maybe it's justifiable i struggle to see how it is but read the room not the time you know to be kind of relaunching this like maybe wait until everyone's just a little bit happier about the tax stuff before you decide to relaunch something like this i hate the idea of this of

36:17Lee Boyce: going into your bank account one but yeah yeah yeah isa funds as well but lee i've been on the receiving end of a mistake by hmrc and they said that i owed money i didn't owe money i'd very clearly told them that i didn't need to put in a tax return this was many years ago etc and i got caught in just an absolute maze of nightmare kafka-esque kind of like calling them up for ages call us back call us there it took bloody ages it's those sort of things that really stress me out as well the mistakes that inevitably will be made i think that this is a slippery slope

36:58Georgie Frost: and i thought that this was a slippery slope uh when i first read about it a decade ago and i remember thinking people are just not going to like the fact that the state can potentially come in with his grabby hands get into your bank account and take what what is owed now this this should be a world in which tax bills and hefty tax bills if correct should be paid and actually i was reading the comments in there and there was an accountant in there saying or it's it's bad but it's also in a way good because there's so many people i see that should have paid a tax bill that haven't paid the tax bill but it is a slippery slope georgia now they said that to kind of put a little bit around this they have come out with a kind of they say that taxpayers will receive a visit from hmrc agents before any money is taken from their bank account where they will identify the taxpayer confirm it's their debt and to discuss options for a payment that sounds to me like that's going to be quite an expensive job for hmrc like as in i can't imagine agents how many agents going to go around and do that just i don't know i don't know how feasible that is i haven't seen the full plans of how many staffed agents are going to be doing this the rule state their taxpayer must be left with five thousand at least five thousand pounds in their account to enable them to cover essential expenses and there's a 30-day time frame for tax appeals which must have also passed before hmrc can raid someone's account customers who are identified as vulnerable won't be targeted under the scheme um they are the kind of ring fencing rules around this that we've been told um it's saying you know latest figures that there's 42.8 billion in tax loans of hmrc which remains unpaid um with the amount of unpaid tax significantly higher uh than pre-pandemic the government wants to collect 11 billion more in unpaid debt by the end of 2030 it they probably seen this as a little bit of low-hanging fruit in terms of they're looking for ways to plug this fabled black hole we are not getting into budget black holes labor or any of this today no um but they are looking for ways to to plug this and i guess this to them uh feels like the sensible way to do it and again i i don't know you know how many people owe big chunky tax bills um and the reasons for not paying um and how people get away with it because i mean okay i you know pay but i get a letter every six months from hrc and i can tell you it's like clockwork i get one and it says i have uh underpaid tax by a couple hundred quid you owe us a couple hundred quid and then six months after that i'll get a letter saying you have overpaid tax we owe you a couple of hundred quid and i always think how does it why and i always go to try and get to the bottom of it but the thought of phoning hmrc and actually trying to find out the answer just fills me with dread and i don't want to do it um but how people have big chunky tax bills that aren't paid you know i don't i don't get it i don't know how it's spiraled into this kind of um the state that we're in now where there apparently is tens of billions of pounds in under in unpaid tax like i just i don't know but i don't think that being able to the hmosa to be able to discourage your bank account is the answer i really don't i think it's just such a slippery slope because it starts out but then what does it lead to not to go all kind of um big brother on you but i mean i don't like it one bit i mean maybe they're using it as

40:46Lee Boyce: just a bit of a deterrent and saying, look, we now have this power, therefore. And okay, if you're not going to use that power, but that power is always going to be there. It's not like you can go back to holding hands.

40:59Simon Lambert: There are some non-tax-abiding citizens out there who, unlike us, right, who always want to stay on the right side of the tax man, consider it, you know, appropriate to basically just refuse. no i'm sorry i don't owe you the money i'm not paying it kind of thing there's like but often

41:20Lee Boyce: it might be people who get caught but they must have declared it in the first place no tax avoidance

41:25Simon Lambert: schemes or things like that well i i don't know i don't know the ins and outs of it i do know that you know most of us pay our taxes when we're made and don't think that we have any choice but i do know that there is a small percentage of people out there who are you know who are not doing that and they don't believe in doing it and that they you know they will do everything they possibly can to avoid it and so it it creates this situation where this happens if the powers were just being used against those people and they're just being used to do that maybe fair enough but like you say it does sound like a recipe for disaster and what i do know is it's a recipe for bad headlines and lots of comments from people saying this is absolutely outrageous so yeah that that's the main problem i would see with this possibly does more damage than good all right then reader question

42:14Lee Boyce: time. This one is for our pensions agony uncle Sir Steve Webb. I will receive my state pension at the end of November 2026, even though my birthday is at the end of July when I will be 66. Can you tell me why I have to wait until the November to receive it and not the end of July? Will the missing three or four months be reimbursed or taxed? Simon, what's going on here? What does

42:41Simon Lambert: to steve say what's going on here is that there was a law passed back in 2007 that said the state pension age for both men and women should rise to 66 by 2026 67 by 2036 and 68 by 2046 this is meant to reflect life expectancy changes the moves to 66 and to 67 have both been brought forward since that law was passed so this is in steve's words here a law passed in 2011 brought forward the date at which the pension age would reach 66 by six years to 2020 and another law passed in 2014 brought forward the date for a pension age of 67 by eight years to 2028. In terms of the move from 66 to 67 this won't happen overnight but will be phased in between April 2026 and April 2028.

43:30Simon Lambert: The phasing means there'll be some people such as yourself who will have a state pension age which is not a complete number of years but it's for example 66 years and four months so i think there's probably like lots of people in this scenario who are laboring under the impression that they will be getting their state pension from their birthday and will then discover that they fall into this kind of gray zone in the middle now if you go to uh this is money.co.uk forward slash uh steve web you will find all of steve's columns you will find this column where steve explains it and what you will also find in steve's column is our calculator when will you get your state pension and you can put in your date of birth your gender and your postcode those those two things are not relevant when you get a state pension but what it does is it also shows you life expectancy and how much state pension you're likely to get but it will tell you exactly when you'll get your state pension I can tell you when I'll get mine, for example, because I've got it in front of me now.

44:32Simon Lambert: I can have my state pension. Dramatic pause. Under current government plans, I will get my state pension in 2046. All right, good. And I'll get it on my birthday because I'm in the round number bracket. Sorry, I should have... That was like the crucial piece of information that I should have told you, is I will get it when I am 68 and I'll get it on my birthday.

44:58Lee Boyce: Simon. Stats of the week, 78%.

45:02Simon Lambert: That is the number of people who were surveyed by wealth manager Soltis, who said that they expected tax hikes to be brought into force over the coming 12 months.

45:15Lee Boyce: That's quite a lot of people.

45:17Simon Lambert: And these are skewing towards the wealthier people. 48 % said that tax changes were the biggest single risk to their wealth, second only to inflation which 58 % were worried about and it's capital gains tax that families wealthy families think will be hiked some 46 % reckon it's going to go up and that's after quite big hikes to capital gains tax rates in the last budget which actually follow on from the capital gains tax allowance being cut quite dramatically and there's some figures that we talked about a couple of podcasts back which seem to indicate that what this has done has stopped people from selling investments and lowered the capital gains tax take so it might be that if rachel reeves does raise the capital gains tax rates she actually ends up getting less money in

46:06Lee Boyce: than she thinks it's going to just to say you have a very comprehensive roundup of all the speculation uh that might or might not be in the budget you can take a look at that if you fancy a really depressing read basically or you just want to stay on top of things i've also uh checked my state pension age, Simon, here. Apparently it will be January the 14th, 2050, which means life expectancy for someone of my gender in my area is 88 years and two months, which means you will roughly get 20 years and two months, I like how it says optimistically, to enjoy your retirement.

46:42Simon Lambert: In theory. Yeah, see, I'm only going to get roughly 17 years and three months.

46:48Lee Boyce: Is that because you're a boy? Yeah, it is.

46:50Simon Lambert: Well, never mind, eh?

46:51Lee Boyce: Never mind, never mind.

46:52Simon Lambert: Fortunately, I live in a quite high life expectancy postcode, though.

46:57Lee Boyce: But also, you're retired two years earlier than me, so you'll be like, I'm on the slopes. Although you think you want to retire before that, don't you? But either way, that's it for this week. You can keep up to date with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. If you have any comments or questions, let's see, or anything you'd like to give them to.

47:14Simon Lambert: Simon! You can email us at podcast at thisismoney.co.uk. and we want to hear your savings tips you got any oddball savings tips that you do any anything that rivals revenge saving or mind tricks tell us them and we'll talk about the best ones uh and come to this is money.co.uk forward slash podcast find all podcast paths and join in the debate and

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