Bank of England set to print upto £200BN of new money to ease economy

The Bank of England will assess the economic damage wreaked by Covid-19 on Thursday when it makes its latest call on interest rates. Read more: Bank of England set to print upto £200BN of new money to ease economy

Bank of England set to print upto £200BN of new money to ease economy

The Bank of England will assess the economic damage wreaked by Covid-19 on Thursday when it makes its latest call on interest rates.

Andrew Bailey, the Bank governor, said last month that the Office for Budget Responsibility’s prediction of a 35% fall in GDP in the second quarter was not implausible. But economists are debating whether the Bank will publish a range of scenarios rather than a forecast.

The rates announcement will come with an assessment of risks to the financial system posed by the pandemic, which has already prompted the Bank to unleash a further £200bn of quantitative easing (QE).

Most analysts expect the Bank to stick with the record low 0.1% rate and to leave the door open to further QE next month. But Allan Monks, an economist with JP Morgan, said his base case was that the Bank would announce £100bn of additional QE.

Jacob Nell at Morgan Stanley said it was difficult to tell whether the Bank would produce a conventional central forecast. “Some have even suggested that it might just produce scenarios, but in the end, we think it will need to produce a central case.”

The pandemic pushed profit warnings among listed companies to a record high in the first quarter. EY said over 20% of all quoted companies in Britain issued warnings. There were 301 in total, a similar number to the whole of last year. More than three-quarters blamed Covid-19.

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Bank of England set to print upto £200BN of new money to ease economy

Source : Business Matters More   

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Overtaxed pensioners have been able to reclaim £600m this year alone

Savers overtaxed while dipping into their pensions have reclaimed £600million from HM Revenue & Customs so far this year. Read more: Overtaxed pensioners have been able to reclaim £600m this year alone

Overtaxed pensioners have been able to reclaim £600m this year alone

Savers overtaxed while dipping into their pensions have reclaimed £600million from HM Revenue & Customs so far this year.

More than 10,000 people paid too much tax when they took money out of their pension, paying an average of £3,141 too much each, HMRC said. The rules allow savers aged 55 and over to withdraw 25% of their pension as a tax-free lump sum, and the rest as income, to which the usual tax rules apply: you get a £12,500 personal allowance each year and only pay tax on income above that.

The number of people making pension withdrawals increased 23% from January to the end of March, with 348,000 people withdrawing money. The average amount accessed was £7,100, a 3% drop compared with the same time last year.

Pensioners withdrawing lump sums, as opposed to a regular income, are more likely to be overtaxed under “month one” tax rules used by HMRC that mean even a £12,500 withdrawal can push someone into the higher-rate tax band. The full personal allowance isn’t applied to the withdrawal, but only one month’s worth. On a £12,500 withdrawal, this gives a tax-free amount of £1,042 with £3,125 taxed at the basic rate of 20%, and the rest taxed at the higher rate of 40%.

HMRC will either issue a refund at the end of the tax year, or pensioners can claim the money back by submitting a P55, P53Z or P50Z form.

“People dipping into their pensions for the first time as a result of Covid-19 risk getting thousands of pounds less than expected due to HMRC’s emergency taxation policy on single withdrawals,” says Tom Selby, a senior analyst at the investment manager AJ Bell.

Photo by Esther Ann on Unsplash

Read more:
Overtaxed pensioners have been able to reclaim £600m this year alone

Source : Business Matters More   

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