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Richard Murphy says:
January 16 2023 at 11:58 am
Those with low savings don’t need ISAs

They get £1,000 tax free income a year and £12k free pensions. How much more is required?

Perhaps if they had more incentive they might save more?

9 thoughts on “Snigger”

  1. Is he saying he expects to survive comfortably on £13k p.a. when he’s older?

    Anyway, he appears to have overlooked the Starting Rate for Savings which is odd because it would strengthen his argument.

    (Tim, does he go on to argue that ISAs should be scrapped?)

  2. (Tim, does he go on to argue that ISAs should be scrapped?)

    No, he goes on to argue that everyone else’s money must be spent the way he desires.

  3. @ dearieme beat me to it.
    Median household disposable income is £31,400 so “relative poverty” starts at £18,840 for the average-sized household and the answer must be “at least £113 per week”.
    BUT Murphy has got the amount of pension badly wrong – it’s £141.85 per week: that is £7396 pa (£7417 in a leap year). Pension credit will top it up to £9521 (£14532 for a couple) if the pensioner has not enough other income but of course anyone claiming it loses nearly all the benefit of their savings. To get to £18,840 they need £11,400 of savings income.
    [The “new state pension which almost no-one yet receives is/will be £9654, again nowhere near Murphy’s mythical £12k]

  4. My 92 year old mum told us that she now spends about £1000 per month because she rarely goes anywhere these days. At the beginning of their retirement, her and dad needed most of their combined pension income, which I think was of the order of £40k per year, plus some savings to enable them to travel extensively, including China, Russia, Aus, the Nile a couple of times, Uganda three or four times (they lived there when first married), and numerous UK and European trips.

    Their retirement, when they were fit and well, would have been pretty miserable had they only had about £12k per year.

  5. If the government wants to save money (obvs they don’t seriously want to as there’s so much low hanging fruit they don’t pick) then they should drop the PCGC amount to under £150 when the age of 80 is reached.
    My pensions adviser said the expenditure of pensioners over income drops incredibly fast at that age, the cruises stop being taken, the home improvements have already been done.

  6. @jgh

    He’s talking about interest on savings. The £1000 figure is the Personal Savings Allowance. But you’re right to point out that other allowances apply too … and indeed, the £1000 can be taken away if you earn too much. There’s also a £5000 starting rate for savings that he doesn’t mention…

    Most people can earn some interest from their savings without paying tax.

    Your allowances for earning interest before you have to pay tax on it include:

    – your Personal Allowance
    – starting rate for savings
    – Personal Savings Allowance
    You get these allowances each tax year. How much you get depends on your other income. The tax year runs from 6 April to 5 April the following year.

    Personal Allowance
    You can use your Personal Allowance to earn interest tax-free if you have not used it up on your wages, pension or other income.

    Starting rate for savings
    You may also get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.

    The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.

    If your other income is £17,570 or more
    You’re not eligible for the starting rate for savings if your other income is £17,570 or more.

    If your other income is less than £17,570
    Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.

    You earn £16,000 of wages and get £200 interest on your savings.

    Your Personal Allowance is £12,570. It’s used up by the first £12,570 of your wages.

    The remaining £3,430 of your wages (£16,000 minus £12,570) reduces your starting rate for savings by £3,430.

    Your remaining starting rate for savings is £1,570 (£5,000 minus £3,430). This means you will not have to pay tax on your £200 savings interest.

    Personal Savings Allowance
    You may also get up to £1,000 of interest and not have to pay tax on it, depending on which Income Tax band you’re in. This is your Personal Savings Allowance.

    To work out your tax band, add all the interest you’ve received to your other income.

    Income Tax band Personal Savings Allowance
    Basic rate £1,000
    Higher rate £500
    Additional rate £0

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