What you need to do with your Isa and pension before the tax year ends

0:02Welcome to the This Is Money podcast sponsored by Trading212. Download the Trading212 app and open a cash ISA with promo code TIM to get the 12-month bonus promo rate of 4.68%.

0:14Simon Lambert: Terms apply. I'm Georgie Frost and joining me and Simon Lambert today is Helen Crane. And coming up, the end of the tax year is almost upon us. So what should you be doing between now and April the 6th? And what changes can we expect in the new tax year? Also today, the boss of NS &I loses his job over a scandal involving lost funds to the tune of hundreds of millions of pounds. What is going on at Granny's Favourite? Plus, will rates go up four times this year? And will we see a return to security tags on butter? And could you become a£100 ,000 a year tradesperson? Don't forget, in Step State, with all the latest breaking money news, just go to thisismoney.co.uk or download the app.

0:54But first, Simon, the suspense is killing me. quick update on the race to 10 000 simon are you at least in the black well no okay i'll offer my

1:06Simon Lambert: excuses right so actually i will give you a live update on the race to 10 000 just for context if anyone missed last week the race to 10 000 is where me and four other experts have been given 500 pounds our task is to try to turn it into 10 000 pounds as quickly as possible i'm buying and selling shares we have someone buying and selling crypto we have uh someone who is also buying and selling clothes on vintage someone who is buying and selling antiques uh and we also have our investing monkey uh which is randomly picking shares and a sports better least favorite the monkey how's the monkey doing monkey was doing pretty well actually um yeah the monkey was uh on wednesday when we did the scores on the doors the monkey was in second place oh with its randomly selected shares and i have to who uh to the crypto guy i know i know i know i know come on simon who has been successfully investing in something called helium right not the gas not the gas it's all about investing in things to do with the tokens that are setting up the sort of global information infrastructure and bandwidth and things like that you know it's moved on it's not just bitcoin anymore bitcoin's old hat yeah but in your defense simon investing is for the long term isn't investing is for the long term and this long term investor is actually attempting to trade because that's what you're doing if you're trying to make money fast i am uh trying to momentum trade i'm looking for shares that are bouncing that day or shares that have had an upgrade to results or shares that have some momentum behind them i appear to be unfortunately momentum trading in reverse and i'm down 31 pounds was that better than last week or it's about the same wasn't no that's that was worse than last week i'm a momentum trading in reverse yeah i mean monkey at last count was up 30 something pounds actually i think the monkey i've got an inside line on this obviously because yeah my colleague jessica beard who's pulling this all together she updates me on the monkey uh as she's operating the monkey yeah the monkey i think might be up more than 30 pounds now i think the monkey might be momentum trading in the right direction Does she have a little smirk on her face, Jessica, when she tells you this?

3:18Or is she a bit sympathetic?

3:19Simon Lambert: I'd like to say that she looks apologetic and sympathetic and all of those things. But she's normally smiling. So what are you saying, Simon? Are you in last then? No. Okay. Technically, no. The sports better guy was doing worse than me. And I wasn't doing this badly when we did the scores on the doors on Wednesday. And then you've got this situation where the fashion reseller and the antique guy, They bought a load of stock, but they hadn't sold it yet. So they've sunk a load of money into stock. Now, I would expect them to suddenly start to take the lead in the next week or so as they start to shift some of that stock.

3:57So I'm very invested in this, especially the Vinted one, having recently joined. I think I earned about£100, but those clothes were not cheap in the first place. So I'm really interested to know how they make money on that. But right, let's talk about the new tax year. It is just around the corner. So what should we be doing? Helen, welcome. Let's go to ISAs first, the famous use it or lose it.

4:21Helen Crane: Exactly. So new tax year starting on 6th of April. And that means that everyone gets shiny, fresh, new£20 ,000 ISA allowance. And this is actually the last year that you're going to be able to put that entire£20 ,000 into a cash ISA if you want to. From The next tax year, April 2027, if you're under 65, you're only going to be able to put£12 ,000 into a cash ISA. You can have up to£20 ,000, but the rest will have to be in stocks and shares. So we're always excited for the tax year and the ISA season, but it's an especially high stakes one this year, I think, for people. Just on that, Helen, because I read loads of articles.

5:05I mean, just maybe it's because of I'm a finance journalist, so I'm alive to it, as it were. But it's all about use it or lose it. But in reality, how many people really use up their full 20 ,000 limit?

5:21Helen Crane: I think you're right. You know, I think we do always talk about this limit. And the reality is that the vast majority of savers don't come close to maxing out their 20 ,000 pound ISA limit. But, you know, there are people that do. people who've maybe come into money, sort of had an inheritance, who maybe sort of property, have money. So there are people that end up through life with kind of large sums that they need to manage. And, you know, also people who have just saved over kind of many years and, you know, do earn a lot and are in a position where they have a lot of money to put away. So you're right, it isn't everyone that can max out.

5:59Helen Crane: But it's worth knowing the limit and knowing when the tax year ends so you can kind of manage it accordingly. Because I was just thinking, Simon, if you do have a lump sum, inheritance slightly different. Well, isn't the advice always to drip feed? So why would you have a ton of money that you could just smack into your ISA? I mean, cash is slightly different to a stocks and shares, but is that a sensible approach?

6:17Simon Lambert: Well, you might have a lot of cash, for example. As Helen said, there might be a life occurrence that means that that happens. You might have some kind of sudden payment. You might have a bonus. You know, you might be gifted some money. You might have an inheritance. You might sell your property, all those kinds of things. And if you do have a large sum of cash, then it definitely makes sense to get it into an ISA rather than sitting in a taxed account. Because in a taxed account, you're losing 20 % or 40 % or 45 % of your interest to the tax man. And frozen tax thresholds mean more people are being pulled into the 40 % bit.

6:54Simon Lambert: More people are being pulled into the 45 % bit. And from April, there's going to be 2p added to all of those rates. So the rates on savings interest are going up. and also you know the tax traps that we talk about child benefit removal it affects that the income that you get from your savings um there's in with the 60 tax trap you end up paying an absolute fortune on your savings interest so it does make sense to get it into an isa if you can my favorite cash isa is a easy access flexible cash isa no restrictions on withdrawals you pay your money in you can take your money out and as long as you put it back in within the same tax year doesn't count as part of your annual ISA allowance.

7:32Simon Lambert: But if you move to stocks and shares, yes, you're right. Ideally, what you'd be doing is regularly investing into your ISA. Ideally, you wouldn't be in a situation where you got to the end of the year and you suddenly had a lump sum in cash that you were just like, oh, I need to put this into my investment ISA. But there are scenarios where that happens. I mean, you're self-employed, aren't you? Yeah, absolutely. You put money aside for your tax bill. Inevitably, your tax bill arrives, you pay your tax bill. and it might be that you're prudent and you're sensible and you put aside more than you actually think you're going to need in tax to make sure that you don't end up under and in fact you end up over and you think right I can pay some of that money into my ISA or it might be that you have one of those lump sums that we were just talking about and you think do you know what I've got enough in cash I don't need the money in the short term I can earn a better return over the long term from investing and I want to invest it the important thing is is that you don't actually have to invest it you just need to pay it into your stocks and shares isa and then you can leave the money sitting as cash in there and then you can drip feed it in so say you were in the fortunate position where you had ten thousand pounds and you want to get that into your isa before the end of the year you put your ten thousand pounds in but maybe you're a bit worried about the stock market maybe there might be some things going on in the world that makes you think hmm do i want to invest all of this right now maybe you might have noticed that over the last three weeks the stock market has been on a downward trajectory maybe you might be competing against an investing monkey and a crypto guy to try to turn 500 pounds into 10 000 and and and doing that in the face of a stock market that has tumbled from from the brink of 11 000 down to 9 000 something maybe you might have heard about some of this stuff and be a little bit worried so what you can do is you can put your 10 000 pounds into your stocks and shares isa and if you want some advice on which platform to choose go to thisismoney.co.uk forward slash platforms where you'll see our guide to investment platforms which then also links off to our guide to the best stocks and shares isis the point is you pay your money into your stocks and shares isa and then you when you pay it in it goes in as cash and then it's in your stocks and shares isa as cash and then you can then buy your investments over time so you could do two thousand pounds now you could do two thousand pounds in a month two thousand pounds in another month until you've done the ten thousand pounds we could do a three goes or you could do it in ten goes you could do as many goes as you want if i'm going to be honest and you know hopefully over time the stock market is going to start going back up again and you're going to start to benefit But you're also limiting the risk that you put your£10 ,000 into the market and then all of a sudden everything deteriorates further and the market takes a proper tumble.

10:18Is that going to change that ability to put and hold cash for a short time in your stocks and shares ISA as a result of the new cash ISA limit?

10:27Simon Lambert: Yes, unfortunately it is. This is part of the unintended consequences of... We're not there yet. Next year's problem, but worth thinking about. No, that doesn't happen for another year. But this is part of the unintended consequences of what Rachel Reeves is doing. Because the first thing that happened is people said, well, you know what, you just put stocks and shares and hold a money market fund. Or actually, a lot of stocks and shares and pay really good interest on cash because that's one way that platforms are competing with each other. But then it was rushed out that actually, no, you're not going to be able to do that.

10:59Simon Lambert: You're going to face a penalty for doing it. Now, the problem is, is that there are very good reasons why you might want to move your investments into cash in the short term in your ISA. And is it right that people are being penalised for doing that? Because the way that the ISA system works, and you're not going to be able to transfer from stocks and shares to cash either anymore. The way the ISA system works is, you know, it's detached. These two things, you've got your stocks and shares ISA and then you've got your cash ISA. You might have the same provider for both, but they're not the same pot.

11:31Simon Lambert: and arguably i think there's a lot of merit in the ideas that we should just have one iso where it's all pushed together and you have that allowance you stick within your 20 000 pounds and you can move more seamlessly between the two and i think that would be more likely to encourage people to invest and that's what lots of people say to me i mean the sponsor of this podcast trading 212 okay is one of the biggest investment investment platforms in the country now it's signing up more people than any other investment platform it's also got one of the most popular cash isis because it offers a really good rate now i have spoken to the guys at trading 212 about this and they've said yeah people open the cash isa and then some of them start to invest and it does work that way you know and that's a very good reason for not cutting the limit now i mean there's questions should we be giving people this big tax break and so on with isis but ultimately the allowance has been frozen for a long time tax thresholds have been frozen for a long time it's not like we're getting a lot of tax breaks at the moment if we were in a world where we were having tax breaks thrown at us left right and center then maybe i could see the argument for that but we're not in that world and unfortunately you know when something like the iran war happens after the new rules come in and if you go wow do you know what actually i need to de-risk a bit and i'm going to move some of this to cash you will get penalized for it you'll get penalized even for holding a money market fund which is a cash-like investment within it so people are going to have to find other things that kind of replicate that the interesting thing will be whether people start to come up with investments in stock market listed stuff that behave like cash now the the thing that you could do of course is you could move into gilts within your isa and bonds are theoretically safer the problem is is that the bond market is hugely volatile nowadays as well.

13:20Simon Lambert: So it's not like that's necessarily the safe place to park your cash. Absolutely right. Two things there. You made a point about the generous£20 ,000 limit. Obviously, I'm spending a lot of time in Canada. They're equivalent to that, the TFSA. The most you can save is about£3 ,500. So it really is, I mean, we forget, like you said, we don't get a lot of tax breaks but then neither do people in canada but how do they tax savings and investments and the returns on them i mean that's the question you need to ask in the context of these things so there is you know the isa allowance actually by international standards is a relatively generous allowance it's quite a generous allowance in fact it's near the top of the tree but there are lots of other countries where interest is not taxed in the same way stock market gains are not taxed in the same way and bear in mind that the capital this has never been more important to invest in an isa because the capital gains tax allowance has been slashed from 12 300 pounds a year to just 3 000 pounds and it wasn't labor who did that that was jeremy hump unfortunately rachel reeves then decided to raise capital gains tax rates on the top of that also the dividend allowance has been slashed it was two thousand pounds it's now five hundred pounds it was actually five thousand pounds not that long ago again wasn't rachel reeves who did that that was jeremy hunt but rachel reeves has gone oh well do you know what i'll chuck a bit in the pot for good measure and she's going to up dividend tax rates and that's kicking in from april so it's really important to do this and then also you have to look at it like in an international context of like what are the other taxes that people face you know are their tax thresholds going up with inflation.

15:03Simon Lambert: What happens about inheritance tax in those countries? A lot of countries have much lower inheritance taxes than we do. So I think, yes, we have a pretty generous ISA allowance, but we don't have it so good on other things. So any Canadian experts, most welcome to let us know the actual rules on this. But I do understand that there's no personal allowance for savings. Haven't looked into inheritance tax yet. Hopefully that's not relevant they do favor i think um investing over saving and it's a lower dividend tax we'll get onto that in a sec but also pensions as well this is something that i spotted but in candida it's limited to under 20 i think of your income up to 33 000 which is sort of double the rate of of the pound so whatever that works out 16 17 000 which that's substantially lower than what we are able to put into our pensions in the UK.

15:58Just one question I have about ISAs. If you've got your cash ISA, let's say we're trading 212, and you've got your socks and shares ISA, I know with a Hargreaves or a Fidelity, how does the tax plan know how much you've got in each so you don't go over?

16:14Helen Crane: Yeah, I mean, it's a good question. People often wonder about this. It's the same with normal savings accounts. People say, well, you know, how does HMRC know if I should be paying tax on my savings? Are they sort of snooping on it? HMRC, as I understand it, can ask, you know, your trading team and future banks to report on how much people have in their ISAs. So it's possible HMRC can ask for the information and they can get it. So I don't think they report how much every single person has in their ISA to the government. But I think that it would be able to get the information if it kind of needed it.

16:51Helen Crane: So it's sort of like a honesty system. That's right, isn't it? They could find it if they wanted, but they don't have a list of exactly how much everyone has in their savings account. Having spoken to my accountant recently, you might think that's too small for HMRC to bother. But he said in the first six years of being an accountant, he said he must have had HMRC look into small people's accounts maybe eight times in total. Not often. He says now he's getting it dozens of times a year. So HSMRC are really cracking down on the smaller fry, as we know, because we've reported on it. Anything else we need to think about before the end of the tax year, Helen?

17:28Helen Crane: I think it's always just worth having a bit of a refresher on the sort of ISA rules. So we've got a really good article on the website by our colleague Rachel Richard Strauss. The 10 little known tricks to turbocharge your ISA. It's got some really good nuggets in there about how to use the rules, which I think are a bit complicated. to your advantage. So reminding people of things like you can open more than one ISA in a Taksha. I had this conversation with my other half this week. He realized that the rate on his ISA wasn't very good. And I said, oh, just open another one. I can tell you the best rates.

18:04Helen Crane: And he was like, oh, but I'll have to wait until after April, won't I? I was like, because I've already opened an ISA this year. I was like, no, you can have as many as you want. I think people genuinely don't, you know, people who don't spend all their time thinking about ISAs like us. Just anyone who doesn't... I was like, no, you can open as many as you want as long as you just don't go over the limit. But yeah, it's got some really good tricks in there, mostly how to kind of maximise your gains on it. So yeah, recommend that I read. That lack of knowledge reminds me of what Simon has literally just said about having everything in one, trying to simplify it.

18:38There are a lot of rules and things have changed recently.

18:42Simon Lambert: Well, and this is an argument for not changing the rules as it confuses people and people don't necessarily hear the message they hear the noise you know how many people are engaged enough with their finances or their savings in this country to know that it's the cash isa limit that's been cut to 12 000 pounds or do they just hear isa's cut most of the people listening to this podcast know exactly what we're talking about um but they're listening to this is money podcast they're highly financially engaged unfortunately a lot of the population and aren't. And I mean, this is an issue with pensions.

19:17Simon Lambert: It's been an issue with pensions for many years. You know, there's a really strong argument for not tinkering with pensions, because every time you tinker with it, you undermine faith in the system. And we see this in reader comments all the time. What's the point? They'll only change the rules. They'll only take my money off me. Pensions is something that people also do need to consider before the end of the tax year. It's sort of a use it or lose it allowance, but it's not quite, because you can carry forward an unused annual allowance from up to the previous three years. Secondly, it's£60 ,000.

19:50Simon Lambert: So it's unlikely most people are going to hit that limit. However, you do get scenarios, particularly actually with the self-employed where they haven't been saving into a pension and then later in their career, they suddenly realise they've built up all this money in their bank account and then they start trying to put it into a pension. You do have a scenario there where people do put in larger sums. The important thing to remember about the 60 ,000 annual pensions allowance, however, is it doesn't mean that you can pay in 60 ,000 pounds. And this is actually somewhere where people do get tripped up when they have those large sums.

20:23Simon Lambert: You can pay in 48 ,000 pounds because the 60 ,000 pound allowance includes the basic rate tax relief that you automatically get on pension investments, pension savings. So that illustrates the power of putting money into a pension because you automatically get a 25 % uplift on it. That's to give you back basic rate tax, which is 20%. And the way the maths works is if you get paid£100 and then you pay£20 in tax, which is 20%, to get you back to£100 from 80, you have to lift it by 25 % from that lower number back to 100. If you're a higher rate taxpayer you can claim back the extra tax relief on that yourself.

21:04Simon Lambert: Where else can you get an instant 25 % uplift on your investment? Now the one place where it is potentially important to do this before the end of the tax year for people is if they actively want to try to reduce their income for tax reasons and this is something that's especially valuable to those people who were caught out by some of the tax traps. So for example child benefit removal and the removal of the personal allowance above£100 ,000. Also things like the removal of free childcare for parents if one parent earns above£100 ,000. The money that you pay into your pension reduces your income effectively to below that level.

21:45Simon Lambert: Now obviously it's not the case as often gets suggested by many financial experts well just pay more into your pension because people might actually need that money to live on life is expensive tax thresholds have not moved in years and actually you know this is going to sound pretty crass but 100 grand salary doesn't buy people what 100 grand salary used to buy it's a very big salary just to be absolutely 100 clear but it's not as big as it was when that removal of the personal allowance was introduced all the way back in the tail end of the Labour government before the Tories came in in 2010.

22:23Simon Lambert: So if you do need to do that, then you need to do that before the end of the tax year, and that will reduce your income. And it's important to also think about some of the other things that you might need to do. So for example, you said most people can't fill their whole ISA allowance. But if you hold some stocks and shares that are not in an ISA, you can consider doing something called a bed and isa where you sell them you crystallize the gain so you basically could use your three thousand pound cgt allowance or if you go over it might have to pay some tax but you then can buy them back within an isa and that means that any profits that you make in the future are free of capital gains tax or free of dividends and that can be a really good move to make you can also do a bed and sip and pay stuff into your sip now many investment platforms will offer to do the work for you on this but you might be past the deadline for them to do that but you might still be able to sell your investments yourself and then buy them back within your isa so 27th of march now you've got until the 5th of april that should theoretically be possible to get you know the sale to clear by them and then put the money back in you could also do things like transferring investments to a spouse and take advantage of their CGT allowance as well.

23:40Simon Lambert: But you might again be past the deadline for doing that. I suppose the argument people say, God, what if I crystallise a loss by selling them, but then you'd be buying them in cheap, wouldn't you? Well, if you crystallise a loss, you can actually claim that against capital gains elsewhere. So that is the one advantage of investing outside of an ISA, is if you make a loss, then you can offset that against any gains that you make elsewhere to reduce your capital gains tax bill so for example were you engaged in a challenge against an investing monkey and you found yourself to be down 31 pounds then you could use that against gains elsewhere however i put that 500 pounds into an isa so i'm doing all this without having to worry about tax at all and one of the reasons why i did that is to avoid the potential administrative headache from having been given 500 pounds by my employer to invest money and then potentially ending up with a capital gains or dividend tax bill.

24:35Simon Lambert: Bear in mind, I am giving any of this money that is left and hopefully the profit backs to my employer. Well, the profit's going to charity, but the£500 goes back to my employer. Nice. All right then, Helen,

24:46Helen Crane: what's coming up though in the new tax year? Yes. So making tax digital is changed to the way that people who do sort of tax returns have to report their income. So this is for, for example, sole traders and landlords. So from the start of the new tax year, if your annual income from self-employment or property is over£50 ,000 a year, you have to use a specific type of software to do and make tax digital tax returns. So it basically means that you have sort of digital records of your income and expenses and you have to send them to HMRC quarterly, which wasn't the case before. So it's essentially a sort of additional admin headache for anyone who makes money from self-employment or property.

25:39Helen Crane: Also dividend tax, the other updates from the 6th of April, the start of the tax year, dividend tax is increasing by two percentage points. So that is going up on the basic rate from 8.75 % to 10.75 % and the higher rate from 33.75 % to 35.75%. And the additional rate is staying the same, which is 39.35%. All right then, Helen, all right, Simon, let's move on, because goodness me, of all the banks you expect a scandal which results in the defenestration, that's hard to say, of the boss, MS and I would be last on your list, but here we are. Around 37 ,500 people are affected, some bereaved family spending years trying to access their late loved one's money, to the tune of many, many, many millions.

26:33Simon when I got the notification pop up on my phone that the boss had gone goodness me the house of cards no what's going on

26:43Simon Lambert: well it seemed remarkably quick for this government we were saying yesterday in a conversation with someone it's like normally they allow these things to linger for weeks months kick up a big fuss etc maybe it's because it's a different organization to themselves making the mistake this time around they've acted quickly But what's happened is that NS &I has estimated that up to 37 ,500 billet revment claims with a total potential value of 476 million in customer deposits may have been affected by a load of blunders that means they basically lost track of people's savings, premium bond prices and so on.

27:26Simon Lambert: However, that 37 ,500 people might not be 37 ,500 people. It might be considerably less. It might be in the middle between that and zero. It might be much closer to the zero end of the spectrum. The 476 million, it might be much less. They're not sure. They don't know what's going on. They're investigating at the moment to try and work it out. But it does highlight that this has been a bit of a disaster for them, a disaster that was big enough for the boss to have to go. Goodness me. When I was reading this, I was just thinking, some of these families have been trying for years. What's taken so long?

28:12And where are we now with the money? Is it gone?

28:15Simon Lambert: No, it's still there. They're just trying to work out what on earth's going on and trace it. And this is exceptionally frustrating for anybody who's caught up in this because obviously when a relative dies that's a very very sad time it's very painful for people dealing with probate is also quite painful painful in a different way but if you're very upset by the death then it can really grind you down i remember after my dad died and i was doing probate having a real problem with the post office he had a post office savings account most of the companies i dealt with were really really good the post office was absolutely bloody rubbish what a shame yeah and the other people who were rubbish were hmrc who basically they're almost like a fishing letter that they do to people saying we know that you used to have this and you need to make sure you pay your tax properly and if you don't we could do this and we could do that and we could do that and they basically say hey, we know you were a buy-to-let landlord.

29:18Simon Lambert: We know that you owned a property abroad. We know that they're doing crypto letters at the moment. We know that you own some crypto. And then they say, you know you need to pay your tax properly. And then they do a bit in the letter that lists all the really bad things that could happen to you if you don't. Annoyingly, HMRC started sending my dad these letters about having had a holiday home overseas that my family had owned years before and had been sold and all the tax had been paid. after we'd already told them that he was dead and they were sending him in his own name and i spoke to them and said firstly right i've already checked and all the tax was paid secondly i've already spoken to you and you've told me all the tax was paid thirdly i've also told you to stop writing to him because he's dead and then they like continue to write to him another couple of times now fortunately i've got quite thick skin but if you were the kind of person who was you know really upset about the loss of a loved one or you know and obviously i was really upset about the loss of my dad.

30:15Simon Lambert: Of course I'm saying I wasn't. But you know what I mean. If you were someone who had been really affected by something like that and you're getting these letters to send to them in their name, then you get quite upset by this. So if you are one of these people in this position with Ernest and I, this is just going to be extra stress, extra burden, extra pain. And also, that doesn't even factor in the fact that a lot of these people might need the money and they're waiting on it and they can't get the money. So what should you do if you're affected? Well, what you should do if you're affected is wait for the nsni and the treasury to get a handle on this and start letting people know what they should do what you shouldn't do is something like sign up to a claims management company yeah or or a solicitor or something and actually torston bell fair play to torston bell on this you know he actually made this point yesterday when um he was speaking about it uh in parliament pensions minister is he yeah and he said don't contact a claims management company if you see ads from a claims management company don't sign up we're going to sort this kind of thing because it won't help you all you'll do is you'll lose some of the money yeah for sure and the same is true also at the moment of the motor finance compensation there's meant to be an announcement or an update on that next week that's coming out and you know anybody listening to the podcast you know if you're tempted do not sign up to a claims management company for that you basically the fca has a scheme the fca has actually got advertising out telling people not to sign up to a claims management company i'd like to think lots of Our listeners wouldn't do that.

31:43Simon Lambert: But just as a reminder, don't sign up to a claims management company to get motor finance compensation. Well, I think you've said that like 10 times in the space of two minutes, but you've done really well. Because I think that is a point worth saying 10 times in two minutes. Just this is a hard question to answer. So sorry for asking it, Simon. But oftentimes when we see something like this, you know, sort of a newspaper investigation, and you've done plenty of these. oftentimes the initial wave is just sort of scratching on the surface i'm just curious to know whether you think this has legs whether this is just a tip of the iceberg for a wider problem or actually no we seem to have sort of got the nub of it basically i genuinely don't know the answer to that question um i'm not sure i don't know i hope that they've basically got a grip of this early doors well obviously not early doors enough for lots of people not to be affected Yeah, for sure.

32:40Simon Lambert: But I hope that this isn't the tip of the iceberg. I hope that this gets sorted quickly and that they're on top of it properly now. I hope that this doesn't then emerge into a whole load of other stuff that's going on and causing problems. I was just thinking, like, millions. I mean, millions. We love premium bonds. We love MS &I. There's a lot of money and a lot of people who've got things with them. So let's hope it is just that this is the iceberg, not the tip of it. All right, then. Unemployment rates are rising, salaries are stagnating and the economy is flatlining. Businesses are turning to AI to cut costs, but there is one sector that is booming.

33:17Workers in the construction industry and trades, everyone from plumbers to plasterers, are in hot demand. Many can now command impressive salaries, frequently in the six figures. Plus a shortage means the good times show no sign of slowing down. So how do you, if you fancy a career change and you maybe fancy a pay rise looking at this, How do you set yourself up as a plumber or an electrician, Helen? And what are the tricks that successful tradespeople are using to earn the big bucks? You have an article on this. Helen, what are the tricks?

33:47Helen Crane: I think everyone's got that story or that anecdote, haven't they? I've got a mate who's a plumber and, you know, he earns double R-I-A-D. But this article was raised, it's obviously true. You know, people who are doing these jobs and if they're good at it, I think that's the key. Like you have to actually be good at it and that can earn huge amounts. So some stats from the article, according to Checker Trade, the day rate for a carpenter on average,£360, an electrician,£500 and a plumber,£480. And obviously, you know, taxes and things get taken off that. But that's pretty tasty wages. And so this article that we've got on the website is about people who've retrained into these kind of jobs.

34:27Helen Crane: And I think you are seeing people maybe later in life now looking at these kind of things. You know, it used to be that people would go into this stuff as an apprentice or straight from school. But with things like AI taking jobs, the job market not looking particularly good in a lot of more sort of white collar roles, people are thinking, actually, could I retrain to do something sort of working with my hands? And I think it's a different sort of pace of life. Right. So my dad actually did this about 20 years ago. He'd worked in sort of a few corporate jobs and retrained as a painting and decorator.

35:07Helen Crane: Has done it for years, really loves it. He only works in the little village that he gets so much business that he doesn't really have to travel. Just, you know, gets work by word of mouth and earns a decent wage and a lot more relaxed than kind of going to an office every day. so we've spoken to some people here as well who are doing these kind of jobs and they've sort of talked about how how they got into it and their sort of tricks to to kind of making it work and and you know making a real sort of career out of it so obviously picking the the right thing to do is important so look at your skills are you can you do something as well heavy lifting hard labor Are you maybe more artistic, something, you know, something like decorating where you have to kind of have an eye for it?

35:57Helen Crane: What are your kind of skills, first of all? And then, yeah, how do you train? So work out what the right qualifications to do are. Is it an MBQ, an apprenticeship? Obviously, the money sort of comes into it here because apprenticeships can be quite badly paid. But, you know, you might be able to get kind of work on the job and be earning as well. It is really interesting, so I recommend giving it a read. Well, anyone who's tried to book up a tradesperson at the moment knows how in short supply they are. I'm wondering if, you know, Hannah Spencer, the Gorton and Denton by-election winner for the Green Party.

36:34She was a former plumber and I saw her on Instagram teaching herself how to be a plasterer. I wonder if that's also making women think, yeah, this is something I could do. All I will say to anyone, and I have a dodgy back, so my uncle was a carpenter, my other uncle was a plasterer, just watch out for your discs in your spine i mean just just watch that one you might want to be an electrician or a plumber instead simon i think the point helen made about doing it later

36:59Simon Lambert: in life is is good as well is that you know you might be at the point where you've got to you know you're kind of late 40s or 50s and you might be fed up with sitting in front of a screen all the time you might think you know what i'm going to go find myself a job where i don't actually have to look at a screen so you know plumber carpenter electrician you might enjoy is i think you need to be a the kind of person who enjoys this stuff anyway and is already quite handy people know if they're handy or not you could be other things tree surgeon for example i quite like the idea of tree surgeon oh i can take the heights outside all the time a friend of mine he used to be a addison lee driver and then he actually moved to canada as well georgie with his partner at the time he became a green keeper on a golf course he's massive loves golf massive golfer became a green keeper very seasonal that though i would imagine because there's not a lot you can do in the winter well especially in canada exactly yeah especially in canada but also you look nowadays and you look at people who are still working you know beyond traditional retirement years and and you know they provide an inspiration to people for some of those jobs you don't need qualifications For example, Donald Trump, there's no qualification to be US president and he's 79.

38:13Yeah, that's true.

38:13Simon Lambert: And so he's an inspiration to us all. I mean, isn't he? I mean, he's doing a really good job. And then you've got other people. For example, we were talking this week about who could possibly take over at Spurs and save them for the rest of the season with Helen. And Lee suggested that Harry Redknapp would be the ideal candidate. Now, Harry Redknapp, fantastic, fantastic. I thought Sam Allardyce would be in there. Sam Allardyce is busy sorting out the problems in the Middle East. He's going to be a caretaker manager over there until the end of the season. But you look at Harry Redknapp, he's 79.

38:46Simon Lambert: I think Harry Redknapp would do a fantastic job. The other name that came up as well was Roy Hodgson. Unfortunately, you can't have Roy Hodgson anymore, Helen, because Roy Hodgson, aged 78, has made a surprise return to management at Bristol City. Well, there you go. Bristol City's gains spurs his loss. I mean if we want to go full circle on this conversation there is a possibility that you know someone could still change careers who loves golf and become a greenkeeper maybe we could see Donald Trump do that next yeah I mean this conversation has just taken a turn I was not expected so I'm just going to park the car here I was just going to bring it back to money very quickly one thing all of these people cannot do however is pay money into a pension and get tax relief because you don't get tax relief or money you pay into a pension after the age of 75, which is very galling for the people still working after the age of 75, including my mother, who was 77 and still runs her own business and was really annoyed when that happened.

39:43Right. OK, I thought you were talking about presidents can't pay into a pension in the UK. Well, that was obvious. But anyway, let's bring it back to money, shall we? Let's get sensible here. Because traders are now betting, so we're hearing, on four interest rate hikes this year, which would see the Bank of England base rate rise from 3.75 % that it is today to 4.75 % by Christmas. It's obviously down to the fear of the Iran war pushing up inflation and the Bank of England acting to try and dampen that. Before the war, though, bets were that we'd have two rate cuts. So this is a bit of an about turn.

40:21However, for all mortgage holders getting slightly nervous about that, a number of economists have told, all of them have told this is money, that they reckon markets have overreacted to the war, the inflation threat and its potential ramifications for interest rates. And actually, we won't have any movements at all this year. Who, Helen, is correct on this score?

40:41Helen Crane: It's quite a difference of opinion, isn't it? Markets saying four rate hikes and these three economists who are respected guide, Barclays, Capital Economics, Oxford Economics, they've all said that they think rates will stay at 3.75 % where they are now into next year. But nobody's saying they will go down. Nobody's now predicting that we'll get two rate cuts. I mean, probably someone out there is predicting it, but I think it's very unlikely. It is this sort of tension between markets, obviously very immediate, very kind of jittery, very panicky. We're obviously seeing these sort of soaring oil and gas prices.

41:18Helen Crane: And they're thinking, right, inflation's got a spike. So interest rates are going to have to go up rapidly to kind of counter that. And in a way that is true. I mean, that's the point of what the Bank of England does. That's why they raise and cut interest rates. But I think what these economists are saying is the conflict in the Middle East isn't the only thing that the Bank of England are thinking about when they make these decisions, right? So they obviously need to balance inflation with growth. So as well as not wanting to kind of dampen down these costs, they don't want to cut growth too much, because then we start to get things like more job losses and things like that.

42:01Helen Crane: So it's kind of saying it's a balance of things that the Bank of England has to take into consideration. And although it looks like that, you know, this conflict is going to have a huge impact on costs, on people's bills, that isn't the only kind of thing that they're thinking about. And I think these economists are saying, before all of this happened, they were kind of forecasting cuts, but now it might just be, it won't be cuts, but maybe it won't be rises either. Right. So it's sort of, there's nothing really you can do in anticipation, but sort of keep calm and carry on? Yeah, essentially.

42:38Helen Crane: I mean, don't panic if possible. I mean, it feels quite hard not to panic at the minute, doesn't it? I feel like, you know, you woke up this morning and you're seeing articles like, what would happen if bombs were dropped on London? It's like, we're in very panicked territory I feel. I mean that is rather extreme but even sort of taking it down a notch and reading if you are you know articles in the newspaper sort of talking about how petrol is going up so much how energy bills after the initial drop in April could go through the roof food as well we'll get onto that in a second you know could be going up it is like oh god are we here again and I think that's it people's memories are are long but actually you don't have to think back that far to remember times of inflation hitting 11 % over 11%, food inflation 19%.

43:26I remember fights outside blooming forecourts and petrol stations. Do you remember that?

43:31Helen Crane: Yeah, exactly. You're right. And I think the key thing is that, as you said, we all remember the cost of living crisis. I mean, are we in a cost of living crisis again? Not yet, probably, but in a few months time, maybe. But the cost of things, you know, the prices that spiked then never actually really went down in a lot of cases. For example, food shops, you know, the price of food went up. It's not like inflation went down and supermarkets said, oh, well, we'll cut the price of butter now. No, maybe it didn't rise as quickly, but it didn't go down. So it's kind of piling costs on top of costs.

44:07Helen Crane: And I think people are still feeling the ramifications of the previous cost of living crisis. You know, things like people maybe have less money in savings or no money in savings or they have debts that they didn't have before the last cost of the crisis happened. So I think a lot of people have a bit less of a buffer against things like that. You know, it's been a really battering few years for people's finances. And all indications are we're going to be battered even further. I mean, that's a great point about inflation. Let's take food inflation because we're going to be talking about that.

44:38I mentioned And then 19 % it went up to in March 2023. It's currently just over 3%. But it doesn't mean that it's gone down. It just means that food prices are rising but at a slower rate. And it's built on that 19 % that we had back then. And so actually, and I remember, Helen, you talking about your shock at the price of olive oil, up over 100 % since 2020. Other things like milk, butter, over 50%, 60 % than it was back in those days. But Simon, just slightly reassure us. I mean, how on earth anyone can say worst case scenario? Because how do you know how long something's going to last? But I was reading the other day the worst case scenario of food price inflation, 8 % in the next few months.

45:27It would significantly add hundreds of pounds to a family's food bill over the year. what's the likelihood and what will be hit the hardest with food and what can we do about it food price inflation is really annoying and people have been really annoyed by food price

45:45Simon Lambert: inflation in recent years and in fact as you said just then even as other inflation has ebbed away a bit food price inflation has been very stubborn seen various iterations of it we saw greedflation remember greedflation branded products providers putting up prices by more or accused of putting up prices by more than their own prices were going up by accused of profiteering off the back of the cost of living crisis shrinkflation that's where they don't put the prices up but they make things smaller shrinkflation and greedflation at the same time where they put up the price of branded products and make them smaller which is particularly annoying steakflation that's been awful the price of steak has gone through the roof skimflation have we had that one when they basically made the quality of the ingredients yep yeah less good yeah exactly so these are the problems weather more extreme weather long periods of dry long periods of wet fertilizer that's been a problem fertilizer costs animal feed costs grain costs wages energy the list goes on basically and now unfortunately we look like we're going to be hit by another wave of this stuff so fertilizer costs there's warnings on fertilizer costs at the moment that's obviously quite an expensive bit of farming go watch your Clarkson's farms to find out more wages obviously the minimum wage has gone up for British farmers this has caused a problem uh employer national insurance that's also causing the problem energy costs businesses are not protected from energy in the same way that we are as consumers and businesses are facing potentially some of them a cliff edge come april when they might have contracts that reset and they could suddenly find that due to the wholesale price of energy rising substantially their prices are going to go up fuel costs and so on and we have a list of the foods that have gone up by the most in the last two years okay i'll start from the bottom tinned soup up 21.43 percent vegetable stock 20 pieces so that's stock cubes up 24.5 percent meal kits up 25 percent breakfast snack bars up 26 percent ice lollies up 37.5 percent tinned beans up 40 percent 40 percent rise in the cost of tinned beans you get a lot of energy out of a tinned bean though and i'm it's not clear whether we're talking baked beans here or whether we're talking things like mung beans cannellini beans and chickpeas and things like that is a chickpea bean no i don't know is a chickpea bean Lagoon?

48:33I don't know.

48:34Simon Lambert: A pulse. I fear this is a rabbit hole that we could go down. And after already being exposed to the Roy Hodgson rabbit hole, I don't know whether we need to go down that one. Yeah, bring it back. Bring it back. So we're going to swiftly move on to noodle ready meals. Up 73.9%. 73.9%. Is this because they're coming from quite a low base? They were always quite cheap and seen as like a cheapy meal. £1.20 noodle ready meal. I mean, presumably this means like a pot noodle or something. That's not like a whole meal. Pork sausages up 88.57%. Wow. That's for a 12 pack. That's a lot. And at number one, we have vegetarian mince alternative.

49:16Simon Lambert: Yes, it is the new indie band out of Leeds vegetarian mince alternative at the top of the charts up 108%. Wow. £2.60 for your pack of 300 grams of vegetarian mince alternative compared to£1.25. What you will notice about a lot of this stuff is it's probably things that you could avoid. You know, these tend to be the kind of pre-packaged kind of stuff. Tinned soup, obviously, you know, it's soup in a tin, vegetable stock, you kind of need that. But do you need to buy a meal kit? Do you need to buy a breakfast snack bar? Do you need to buy a chocolate bar? Do you need to buy an ice lolly? Tinned beans, a bit awkward if you need tinned beans.

49:53Simon Lambert: Noodle ready meal, do you really need to buy that? Pork sausages, arguably those are a human right. Vegetarian mince alternative, no, you could probably do without that. I don't know, I'm a big fan of corn, what can I say? But, you know, at that sort of increased price, maybe not. You were talking to a man who just described pork sausages as a human right, so you're fighting the losing battle there. That is true. Don't eat pork sausages. But anyway, Simon, I feel I should ask you for a stat of the week, but I feel like you've just given me a ton of stats of the week, but you can give me another one.

50:25Simon Lambert: I'll give you one more stat. One more stat. £307 million. Apparently that's what the Iran war has already cost British drivers in terms of the cost of petrol and diesel. Diesel is, wow, phenomenally expensive at the moment. Why does it go up more than petrol, Simon? Refining it takes more effort. It can get squeezed by, because it's used more for transport, things like that. Then, you know, there's the demand from there. I guess maybe it's easier for people to stockpile diesel if you run in a big transport firm, if you're able to store the fuel or whatever like that, because it's used for industrial kind of stuff as well.

51:02Simon Lambert: Less cars use diesel than petrol would be my reasons. There are probably other reasons available. The thing is, though, what I would say is what I did notice when I was driving around last Saturday is it does pay to choose where you fill up at the moment. there was a 10p difference between a petrol station and a supermarket petrol station that i saw so for example i think one of the petrol stations i saw which is not normally a particularly expensive petrol station was 175 for petrol whereas i drove past a supermarket petrol station that was doing it for 165 so this is one of those instances where it may pay to choose where you fill up although do limit the amount of driving you do to fill up because that can be a false economy.

51:45All right then. Thank you very much, Simon. Thank you very much, Helen. 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 for the team or anything you'd like and click into, Simon.

51:57Simon Lambert: You can email us at podcast at thisismoney.co.uk or come to thisismoney.co.uk forward slash podcast to find all podcasts past and join in the debate and read the comments. And if you like our podcast, why not rate us wherever you found us? Helps other people find us too.