Scared of exceeding PSA

zagfles

masonic said:

zagfles said:

masonic said:

subjecttocontract said:

Surely the inflation figure is an average of the specific items included in the calculation ?
Not everyone will be a user, buyer, consumer of all of those specific items.
Therefore, everyone's exposure to inflation is different and the result has a different impact on individuals.

It's well worth collecting your own expenditure data in order to know your personal rate of inflation. Thirteen years of data has suggested to me that I experience below average inflation vs even CPI. This takes the pressure of investment returns somewhat.

Interesting - is that based on the actual price of things you buy, or just on how much you spend?

The latter is easy and possibly useful, but tells you nothing about inflation. For instance you could just be consuming less, loads of reasons eg kids moved out, retired and so cheaper holidays, savings on work related expenses etc.

Variable expenditure through life isn't inflation (or deflation), otherwise we and probably most people had massive deflation during 2020 and then massive inflation in 2021/2 And it tends to be lumpy, eg changes when kids move out, or retirement, maybe getting less mobile (for some it may increase expenditure eg using taxis instead of car/bus, for others it may reduce it, eg if they don't go anywhere). But it can't be assumed to be a linear trend that will continue.

It is based on my own basket of goods and services that I consume. Although the figure based on spending doesn't differ by much as I am a creature of habit and simple pleasures, and was classed as a key worker during Covid.

Very interesting - have you any idea what the main items are that you consume more/less of than the general public which would have affected your personal inflation rate?

fuzzzzy

I agree with most of what zagfles has said.

At times as a saver I've felt jubilant as interest rates rise, but to be honest overall I have found the last couple of years a pain in the !!!!!!. I have spent far more time than I would like trying to keep tabs on interest rates, moving money around, trying to make decisions on when to fix, how much to fix, how long to fix for, and in which tax year to get my interest paid.

Give me low inflation and low interest rates any day.

dales1

masonic was classed as a key worker during Covid.

Eskbanker wants to know if this saved you from Lockdown.

masonic

zagfles said:

masonic said:

zagfles said:

masonic said:

subjecttocontract said:

Surely the inflation figure is an average of the specific items included in the calculation ?
Not everyone will be a user, buyer, consumer of all of those specific items.
Therefore, everyone's exposure to inflation is different and the result has a different impact on individuals.

It's well worth collecting your own expenditure data in order to know your personal rate of inflation. Thirteen years of data has suggested to me that I experience below average inflation vs even CPI. This takes the pressure of investment returns somewhat.

Interesting - is that based on the actual price of things you buy, or just on how much you spend?

The latter is easy and possibly useful, but tells you nothing about inflation. For instance you could just be consuming less, loads of reasons eg kids moved out, retired and so cheaper holidays, savings on work related expenses etc.

Variable expenditure through life isn't inflation (or deflation), otherwise we and probably most people had massive deflation during 2020 and then massive inflation in 2021/2 And it tends to be lumpy, eg changes when kids move out, or retirement, maybe getting less mobile (for some it may increase expenditure eg using taxis instead of car/bus, for others it may reduce it, eg if they don't go anywhere). But it can't be assumed to be a linear trend that will continue.

It is based on my own basket of goods and services that I consume. Although the figure based on spending doesn't differ by much as I am a creature of habit and simple pleasures, and was classed as a key worker during Covid.

Very interesting - have you any idea what the main items are that you consume more/less of than the general public which would have affected your personal inflation rate?

My top categories of expenditure are rent (~50%) and groceries (~25%). I suspect the latter, alongside energy (have kept unit costs well below the price cap thus far), will weigh on my figures going forward, but have been surprisingly flat until 2023. Living in cheap areas of the country will have had the largest effect.

masonic

dales1 said:

masonic was classed as a key worker during Covid.

Eskbanker wants to know if this saved you from Lockdown.

It depends what you mean by "saved". I continued working throughout, but wasn't able to say goodbye in person to my terminally ill father before he passed away.

eskbanker

dales1 said:

masonic was classed as a key worker during Covid.

Eskbanker wants to know if this saved you from Lockdown.

Do I?     

zagfles

masonic said:

zagfles said:

masonic said:

zagfles said:

masonic said:

subjecttocontract said:

Surely the inflation figure is an average of the specific items included in the calculation ?
Not everyone will be a user, buyer, consumer of all of those specific items.
Therefore, everyone's exposure to inflation is different and the result has a different impact on individuals.

It's well worth collecting your own expenditure data in order to know your personal rate of inflation. Thirteen years of data has suggested to me that I experience below average inflation vs even CPI. This takes the pressure of investment returns somewhat.

Interesting - is that based on the actual price of things you buy, or just on how much you spend?

The latter is easy and possibly useful, but tells you nothing about inflation. For instance you could just be consuming less, loads of reasons eg kids moved out, retired and so cheaper holidays, savings on work related expenses etc.

Variable expenditure through life isn't inflation (or deflation), otherwise we and probably most people had massive deflation during 2020 and then massive inflation in 2021/2 And it tends to be lumpy, eg changes when kids move out, or retirement, maybe getting less mobile (for some it may increase expenditure eg using taxis instead of car/bus, for others it may reduce it, eg if they don't go anywhere). But it can't be assumed to be a linear trend that will continue.

It is based on my own basket of goods and services that I consume. Although the figure based on spending doesn't differ by much as I am a creature of habit and simple pleasures, and was classed as a key worker during Covid.

Very interesting - have you any idea what the main items are that you consume more/less of than the general public which would have affected your personal inflation rate?

My top categories of expenditure are rent (~50%) and groceries (~25%). I suspect the latter, alongside energy (have kept unit costs well below the price cap thus far), will weigh on my figures going forward, but have been surprisingly flat until 2023. Living in cheap areas of the country will have had the largest effect.

50% on rent will be the big factor that skews your from the average I'd have thought - and will depend on the local rental market, in some areas rents have risen massively, in others I guess they'll have been flat.

subjecttocontract

But those who don't rent, don't have a mortgage, don't travel much or don't buy much fuel will not be impacted by 8% inflation in the same way as others. Everyone is affected in differently.

zagfles

subjecttocontract said:

But those who don't rent, don't have a mortgage, don't travel much or don't buy much fuel will not be impacted by 8% inflation in the same way as others. Everyone is affected in differently.

Of course. As long as you don't use it as an excuse to ignore inflation because your personal inflation isn't necessarily identical to the ONS inflation measures. 

On the specifics you mention, CPI is actually higher than CPIH at the moment so it seems those who don't have housing costs (or have lower housing costs than average) will have a higher inflation rate! Same for those who don't use fuel, fuel prices have fallen since a year ago. So if you don't have those costs, your inflation rate is higher than those who do!!

There's loads of info on the ONS site where you can see inflation split by type of item:

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/august2023

haze23

Hi, new to the forum, hoping someone can clarify the treatment of tax on interest, crux being multiple rates or not. I've only managed to find corner cases, this thread is the closest I've found to a fuller explanation. Seemed relevant enough to be applicable here, apologies if not.

Am I correct in thinking that the tax on interest that takes total income above £50270 is calculated as:

• (amount up to 50270 - 500) @ 20% + (amount over 50270) @ 40% ?

Some hypothetical numbers to illustrate the point.

• Salary 46270 + interest 7000 = 53270
• Total > 50270 => PSA 500
• Taxable @ 20% = (50270 - 46270 - 500) = 3500
• Taxable @ 40% = (53270 - 50270)           = 3000
• Total tax payable on interest = (700 + 1200) = £1900
  

Assuming correct, is this then affected by salary sacrifice into pension? Again, to illustrate, approx. 8% (£3700) sacrifice.

• Adjusted salary + interest = (46270 - 3700) + 7000 = 49570
• Now total < 50270 => PSA 1000
• Interest taxable @ 20% = (7000 - 1000)
• Tax payable on interest = £1200

Apologies again if I've gone OT.