GET THAT REFUND

All over the country thousands of people are due refunds for holidays, flights, trips, concerts, or events that they have paid for but have not happened. The law is clear – if you pay for a service and it is not provided then you are entitled to your money back. These rights are given under various legal provisions, but they all say money must be refunded. If you bought something through an agent - a ferry ticket for example - it is the supplier of the goods or service who remains liable not the agent.

Despite these clear rights, enforcing them can be difficult against a firm that says it will not – or cannot – pay you. It may have offered a voucher for a future replacement trip. Ot it might claim that the event has just been postponed and your ticket will be valid at some future date. 

None of those alternatives take away your right to a full refund.

Enforce your rights

Knowing your rights is one thing, enforcing them can be quite another. So here is my guide to the big stick you can use to make a company obey the law. 

Of course, you have written, emailed, phoned, hung on for ours and tried all the things the firm suggests and you still have not got your money back, as the law says you must. 

Time for the nuclear option. 

Step 1: The court

If a firm owes you money you can go to court to recover it. We used to call it the ‘small claims court’ but in England and Wales it is now done centrally through the Courts & Tribunals Service website at moneyclaim.gov.uk. In Scotland it is called the Simple Procedure at Scottish Courts and Tribunals. In Northern Ireland go to small claims.

Don't worry, you are almost certainly not going to go to court. Begin the court action online. Fill in the claim form with your details, and the details of the firm and the amount claimed. Claim the full amount including non-returnable deposits. Put your reasons. Do not proceed with the claim but take a screenshot of the page.

If you are having difficulty finding details of the firm see 'tracke them down' below.

Step 2: The boss

Forget about customer service, go straight to the person who can make something happen. Email the Chief Executive of the company that owes you the money. You can find that address from www.ceoemail.com. Write a brief, polite but firm email summarising in a few lines what you are claiming and why, reminding them that you are entitlted to your money back and warn them that you expect a refund within seven days or you will go to court. 

Now attach the screenshot of your court claim to the email. That is the masterstroke. It proves that you are not just threatening to 'go to court' but that you know how to do it and are already halfway through the process. 

Emails to the boss will usually be read by a minion. But that does not matter. Every firm has a section to give cases special treatment. You have just reached it.

Shortly after you should get your money. One happy reader who had spent weeks going through the usual channels used this technique and emailed me: “It worked! Easyjet wrote back today and I’ve received the reimbursement to my credit card”.

Turn the screw

If after 14 days this method does not result in a full refund including non-returnable deposits and without deduction of any administrative fees, then go back to your online claim and start the court action. These proceedings are very simple and straighforward and any small fee charged at this stage will be refunded when you win. 

In fact your case will almost certainly never get to court. The last thing any firm wants is a judgement that it has to refund customers. It will be settled out of court and you will be given your refund - in full without fees or charges deducted - and reimbursed for your costs. You may even get a few pounds added on.

Track them down

One problem people find with global companies is that it is very hard to track down a UK address for them. You need that for your court claim - you can only sue a UK entity for money. First, search the website very carefully as it may be there. Second, have a good rummage round the CEO email website - it will probably be there. If not try Companies House. It is almost certain the firm has a UK branch. Try searching on company names but always check you have the right one by looking at the 'people' or 'filing' tabs to see what the company does and who are its directors. The search is free - never google 'companies house' you will get firms that want to charge you for free information. But Google can be helpul to find who owns whom by googling the firm's name and clicking news to see who may own it now. 

Thanks

I am grateful to Helen Dewdney of thecomplainingcow.co.uk for this idea. She has many more in her excellent books How to Complain and 101 Habits of an Effective Complainer.

Paul Lewis 

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MONEY BACK PLASTIC

If you pay for goods or services by credit or debit card or by a prepaid card you have clear rights to get your money back if anything goes wrong. So it is always safer to pay by plastic and you should always do so if you can. With a credit card you have two separate rights.

Legal right

If you pay by credit card for an item which costs more than £100 and up to £30,000 then the credit card provider has a joint legal liability with the retailer for the goods or services you buy. If the product or service goes wrong you can claim the full cost back from the credit card provider. 

For example, you pay for a holiday or flight and the firm goes bust. Or you buy clothes online and they do not arrive. Or you purchase an electronic device which stops working after a week. Or you pay for an online service which is a fraud. In all those cases you can use your legal right to get your money back from your credit card provider. 

The legal right covers purchases made anywhere in the world – whether you are buying in person abroad, or you pay online or by phone. Note the price limit applies to each item not the total amount of the bill. So two items of £80 each bought at the same time are not covered but one item of £160 is.

It is called your ‘section 75’ (or s.75) right because it comes from that section of the Consumer Credit Act 1974.

Of course, it is usually best to go first to the retailer or supplier to get your money back. But if they refuse or have disappeared or gone bust then the credit card provider must refund the whole cost.

Even if you just pay for part of the purchase on a credit card and the rest in some other way s.75 covers you for the whole purchase price if that falls within the limits. So if you buy a £750 sofa and pay a 10% deposit of £75 on a credit card and then you pay the balance in cash, you can claim a refund of the whole amount from your credit card provider if the sofa doesn’t arrive or is faulty.

There is no time limit on making a s.75 claim but it is always best to make a claim as soon as possible. If the purchase was more than six years ago you may find it more difficult as that is the normal limit on legal claims.

Section 75 rights apply to every credit card – Visa, MasterCard, or American Express (credit cards but not its charge cards).

Contract right

If you pay by debit card, credit card, or prepaid card you have a separate right to get your money back called chargeback. It is part of the contract between Visa, MasterCard, or American Express and the bank or firm that provides the card. Chargeback generally has no upper or lower limits, but MasterCard won’t consider claims for items that cost less than £10. Chargeback is most useful for plastic card purchases not covered by s.75. It does not apply to American Express charge cards but American Express credit cards are covered by it (and, of course, they are covered by s.75).

Chargeback covers the same problems as s.75 – goods that are defective, do not arrive, are fraudulent, or where the firm goes bust.

There are time limits for claiming which are quite complex. Normally you have to claim within 120 days – about four months – of realising something has gone wrong. But there is also an absolute time limit of 540 days which is about 18 months. So claim as soon as you know something has gone wrong.

The chargeback procedure involves your bank going to the bank of the supplier and trying to recover money from them. The supplier’s bank will then ask the supplier to provide the money. If the supplier refuses then its bank has to refund you if you have a valid calim. Some guides and some banks suggest it depends on the firm you paid agreeing to refund their bank. That is not true. If can only refuse to pay if it believes that you do not have a valid claim. If you insist you do then it goes to a dispute procedure with Visa, MasterCard, or American Express. The card network's decision is final. If it upholds your claim then the suppliers bank has to pay. It is part of its contract with the netork and if it refuses then it will - or should - lose the ability to use Visa, MasterCard, or American Express. Although it is not a right under a legal provision, it is an absolute right guaranteed by Visa, MasterCard, or American Express and their contracts with the card providers. If your claim is valid the supplier's bank must pay up.

Many banks and card providers misunderstand chargeback and frontline staff may well say that you cannot recover your money or they must wait for the provider to refund them. If the product has failed or not arrived they are wrong. But if you ultimately lose and the network says your claim is not valid you may have to give the money back.

How to claim

Write to your bank or card provider setting out the details of what has happened and say you are claiming a full refund under s.75 of the Consumer Credit Act or under the chargeback procedure. In your initial letter always say that if you do not get a satisfactory response within eight weeks you will take the claim to the Financial Ombudsman Service. That tends to concentrate the mind. If the claim is refused or not resolved within eight weeks then do take it to the FinancialOmbudsman Service. Normally a claim to the Ombudsman costs the financial firm £550. It is free to you. The Ombudsman upholds most of the claims that reach it. You must go to the Ombudsman within six months after receiving a final refusal from the card provider.

Not covered

Section 75 and chargeback apply when the item you purchased is faulty, goes wrong, doesn’t turn up, or was fraudulent. They do not apply if you change your mind. However, if you buy online or over the phone you have an absolute right to reject the item as long as you tell the supplier within 14 days.

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THE CONTINUOUS PAYMENTS RACKET

THE RULES
If you agree to make a payment or series of payments on your debit or credit card you can cancel future payments by telling your bank or card provider which must stop them at once. You do not have to tell the firm that takes the payments though it is sensible to do so if you can.

In the past just about every bank and credit card provider in the UK has told customers they cannot do that and given them false information about their rights to cancel payments on credit and debit cards.

Those rights have existed since 1 November 2009 but in 2025 some banks are still getting them wrong.

As long ago as 28 June 2013 the Financial Conduct Authority confirmed the advice which has been given in this blog since April 2012. The FCA says:

"high street banks and mutuals...have agreed that they will ensure that when a customer asks for a recurring payment to end - that will be sufficient to cancel the arrangement.  They have also confirmed that should a payment go through by mistake following cancellation by a customer the customer will be refunded immediately."

It now has a useful guide to these payments and what to do. 

CONTINUOUS PAYMENTS
These payments are called ‘continuous payment authorities’ or ‘recurring payments’. I will call them CPAs. They are NOT direct debits or standing orders which are regular payments from your current account and are covered by separate rules. You have always been able to stop a direct debit or standing order just by telling your bank. And nowadays CPAs can be stopped that way too. 

A CPA is an agreement you make with a retailer, hotel, gym, insurance company, lender or other firm providing you with a service (they are all called ‘merchants’ in the bank jargon). You give the merchant permission to take money from a credit card or a debit card. Even though the debit card money comes out of your current account it is NOT a direct debit – it is a CPA.

The agreement can be made over the phone or online and it allows the merchant to take money in the future off your card. You normally have no control over the amount that is taken or when – it can be any amount at any time.

In some cases these CPAs are a scam – you think you are buying one item online only to find that you are committed to paying monthly for years. In other cases payday loan companies will store your details and recover future debts using the original card details. Even subscriptions to gyms, publications or insurance premiums are taken through a CPA because the merchant believes it puts them in control of when the payment is cancelled.

In the past it was very difficult to stop these payments. Originally CPAs could only be stopped by the merchant. If you went to your bank or card company it would say that it could do nothing and advise you to contact the merchant to stop the payment. If the merchant refused the bank or card provider would continue to allow the merchant to take your money.

That changed more than 15 years ago on 1 November 2009 when a new law came into force. They were called the Payment Services Regulations 2009 and are now the Payments Services Regulations 2017. Regulation 67 makes it clear that your bank or card provider has to stop the payments if you ask it to do so regardless of whether you have told the merchant.

If the bank or card provider does not obey your instructions then it has to refund any subsequent payment it allows to be taken from your account. And if a subsequent payment causes you to incur any fees – such as an overdraft charge or a late payment fee – or to lose any interest, then those losses have to be refunded too.

Despite that change in the law many years ago listeners and readers still tell me that their bank has wrongly told them that they can only cancel the payment through the merchant. In the past that has included all the major bank and credit cardproviders. But it is not true and has not been true for years. 

Some banks have even advised in the past that the only way to stop the payment is to close the account and cut up the card. Not only is that advice wrong it may not work. Visa and Mastercard can let merchants track you and move the agreement to a card you take out in the future. It has also been known for a bank or credit card provider to try to recover the money – and penalty charges – from customers who have cancelled a card.

Some banks have admitted to me in the past that they have given customers the wrong information. If yours does that, refer them to Regulation 67!

Cancelling a CPA

Tell your bank or card provider that you have a CPA, name the merchant and give any other details you can such as how the payment appears on your statement and, if you know, the dates and times when the payment is normally taken. Tell the bank that you cancel that payment authority with immediate effect. Quote regulation 67 of the Payment Services Regulations 2017. And if necessary mention that useful guide I referred to earlier. 

You can give this instruction on the phone, through an online message, by email, by letter, or at a personal visit to a branch. It is best to do it in writing but always make a note of the time and date when you give the instruction.

If a payment from that merchant is taken in future, contact the bank again and say you want that money (and any penalties or losses it may have caused you to incur) refunded immediately under regulation 76.

If the bank or card provider refuses to do so, or fails to do so after eight weeks, you can take your complaint to the Financial Ombudsman Service www.financial-ombudsman.org.uk or call 0800 023 4567. The FOS will almost certainly take your side in the dispute.

If you have told your bank to cancel a CPA in the past

If your bank or card provider has failed to act on your instructions to cancel a CPA at any time since 1 November 2009 you should be able to get back all the payments taken from your account since you gave that instruction. The bank or card provider has to refund them to you. You should also get back any penalties that the transaction led you to incur such as an overdraft charge or a late payment fee and any loss of interest.

The FCA confirmed this in a previous statement

"the largest banks and mutuals have agreed to review every individual complaint they have received about the non-cancellation of a CPA and to pay redress where payments have continued to be made despite the customer cancelling the arrangement. This applies to all complaints since November 2009 when the Financial Services Authority (FSA), the FCA’s predecessor, began regulating banking conduct."

The rules depend on when you gave the instruction – it must always be on or after 1 November 2009 – and when the payment was made.

Payments made in the last 13 months.  

Tell the bank or card provider

·         That you gave a clear instruction to cancel the payment on a particular date

·         That the payment made was after that date and was therefore unauthorised under reg.67(3) and 67(4)of the Payment Services Regulations 2017

·         That you are entitled to an immediate refund of the amount and any penalties under reg. 61

·         That the event occurred less than 13 months ago as specified in reg.59(a)

Payments taken earlier than 13 months ago

Tell the bank or card provider

·         That you gave a clear instruction to cancel the payment on a particular date (which must be 1 November 2009 or later).

·         That the payment was unauthorised under reg.67(3) and 67(4) of the Payment Services Regulations 2017

·         That you are entitled to redress under reg. 76

·         That under reg. 74 the thirteen month time limit does not apply because the bank or card provider failed to give you adequate information under Part 6 of the Regulations.

You should also add that the bank or card provider has a duty to treat you fairly and to give information which is clear, fair and not misleading. Remind it too of its Custommre Duty. When you asked it to cancel the payment it failed to explain your rights correctly thus preventing you from taking the correct action at the right time.

If the bank refuses take your case to the Financial Ombudsman Service – details above.

The law

The law is in the Payment Services Regulations 2017. 

Regulation 67 (3) "The payer may withdraw its consent to a payment transaction at any time before the point at which the payment order can no longer be revoked …  (4) …the payer may withdraw its consent to the execution of a series of payment transactions at any time with the effect that any future payment transactions are not regarded as authorised for the purposes of this Part."

Regulation 76(1) makes it clear that where a payment was not authorised the provider must "immediately— (a) refund the amount of the unauthorised payment transaction to the payer;

And must also (b)… restore the debited payment account to the state it would have been in had the unauthorised payment transaction not taken place.”

In other words it has to refund any penalties that have been incurred.

The time limit for a refund is set down in regulation 74 which says the customer

74(1) ...is entitled to redress…only if [they] notif[y] the payment service provider without undue delay, and in any event no later than 13 months after the debit date, on becoming aware of any unauthorised or incorrectly executed payment transaction.

However 74(2) states that the 13 month limit may be waived if the provider has not given the relevant information to the customer. That information is set down in Part 6 of the Regulations.

FCA guidance

The Financial Conduct Authority and its predecessor the Financial Services Authority issued guidance on how the Regulations should be implemented. This is from 2012.

“However, it is best practice for the customer to be advised that notice of the withdrawal of consent should also be given to the payee, because the PSRs. [Payment Services Regulations] do not address the payer’s underlying liability under the terms of any contract they have signed.  For the avoidance of doubt, it is not acceptable for the payment service provider to make withdrawal of consent dependent on notice having been given to the merchant.”

It also clarifies that consent can be withdrawn up to the day before the payment is due

"For future dated payments, the latest point at which the payer can revoke the payment

instruction is the close of business on the day before the payment is due to be made, or if the payment transaction is to be made when funds are available, close of business on the day before those funds become available."

It also warns "Be aware, though, that you will still be responsible for paying any money that you owe."

Conclusion
Despite what a bank or credit card provider may tell you you can cancel a continuous payment authority on a debit or credit card simply by telling your bank or card provider. And it must act on your instruction at once.

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MARRIED COUPLES TAX BREAKS

There are three tax breaks married couples can get

MARRIAGE ALLOWANCE

Around two million married couples and civil partners are missing out on a tax allowance that is worth £252 a year. 

The Marriage Allowance allows a spouse (or civil partner) to transfer up to £1260 of their personal tax allowance to their partner if 

(a) their income is below the tax threshold (currently £12,570 a year) and 
(b) their spouse does not pay higher rate tax which begins on incomes above £50,270 a year (£43,663 in Scotland). 

Both must also be born after 5 April 1935 because older couples get a bigger tax break - see below.

Around two million have claimed it successfully but another two million who could claim have not done so. 

How it works
If a couple qualifies then the non-taxpayer can transfer £1260 of their unused personal allowance to their spouse. That will save the taxpaying spouse basic rate tax on that amount which is £252 a year (£21 a month).

Claiming and payment
You can claim the marriage allowance online or through the income tax helpline 0300 200 3300. You will need National Insurance numbers and dates of birth for you and your spouse. Lines are open 0800-2000 Mon-Fri or 0800-1600 Saturday. You can also claim by sending a letter with your details to Pay As You Earn, HM Revenue and Customs, BX9 1AS. That might take longer.

Once the transfer is done the spouse receiving the extra allowance will have a suffix M added to their tax code The one making the transfer will have a suffix N and their tax code will be lower. 

It will be backdated to the start of the tax year and then reflected in a reduced amount of tax each month. If you qualified in the last four tax years you should claim for them too - that would mean a cheque for £1008. 

Problems
The transfer can only be for the full amount of £1260. That can be done even if the person transferring the amount has an income close to their personal tax allowance. So someone with an income of £12,000 who is a non-taxpayer can transfer the full £1260 leaving themselves with a personal allowance of £12,570 - £1260 = £11,310. So they will start being a taxpayer and pay basic rate tax on £12,000 - £11,310 = £690 ie a tax bill of £138. Their spouse will save £252 leaving the couple £114 better off.

The Marriage Allowance is only available to married couples and civil partners. couples who live together but are not married or civil partners do not qualify.

If either partner was born before 6 April 1935 then they cannot claim Marriage Allowance because they can claim the higher Married Couple's Allowance. 

MARRIED COUPLE'S ALLOWANCE 

The Marriage Allowance cannot be claimed if either spouse was born before 6 April 1935 because they can already get a bigger tax break called Married Couple’s Allowance. That is a hangover from a concession that all married couples used to get until it was scrapped from 6 April 2000. But an exemption said that anyone aged 65 then (ie born before 6 April 1935) could still have the allowance.

Married Couples Allowance is worth up to £1127 off one partner’s tax bill. If income exceeds £37,700 the allowance can be reduced but it can never be less than £436. It can be claimed by a member of a couple now if one of them meets the age criteria. So an 83 year old marrying a 55 year old can claim it. It is normally given to the spouse with the higher income and part of it is transferable to the other spouse. If you can claim it then get it backdated for up to four tax years if you were eligible then. More information on Married Couple's Allowance or here 

BLIND PERSON'S ALLOWANCE

There is a third allowance that a married couple can transfer between them. The Blind Person’s Allowance is £3130 in 2025/26 so is worth £626 to a basic rate taxpayer. However, if the blind person cannot make use of it all – has an income below £15,700 in 2025/26 – the unused portion of it can be transferred to their spouse.

To qualify for Blind Person's Allowance in England, Wales, and Northern Ireland you have to be registered with your local councils as blind or severely sight impaired. In Scotland you qualify if you cannot do work that requires sight. If both partners qualify they each get one allowance. More information here on Blind Person's Allowance.  

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State pension steal from April 2026

STATE PENSION STEAL TO COST SOME OVER £12,800

Anyone born 6 April 1960 or later will not get their state pension at 66. They will have to wait up to 12 months after that birthday to qualify, costing them up to £12,849 in lost state pension. 

The rise in state pension age will happen in stages linked only to date of birth. It will be identical for men and women and apply throughout the UK.

            The loss calculations were done by me. An FOI response from DWP is awaited.

The actual loss for any individual will depend on the day of the week which is their payday. That is a weekday from Monday to Friday and depends on their National Insurance number. The loss assumes the individual gets a full New State Pension and assumes that will be £241.05 from 6 April 2026 and £247.10, an increase of 2.5%, from 12 April 2027. The state pension is accumulated weekly so there are four or five weekly payments in a month which accounts for the difference between the minimum and maximum losses.  No account is taken of the up to six days pension that is paid between the birthday and the first payday.

Other losses

The loss of the pension for up to a year is not the only loss for people who reach 66 next year. 

• Winter Fuel Payment is only paid to those who reach state pension age in the qualifying week in September. For winter 2026 the last date to qualify is expected to be 27 September 2026 which will include people born 27 June 1960 or earlier who will be 66 and 3 months. In winter 2027 people born 26 December 1960 or earlier aged 66 and 9 months will qualify. The same rules currently apply to the Pension Age Winter Heating Payment in Scotland. 
• People who work must pay National Insurance contributions until they reach state pension age. They start at 8% on earnings over £242 a week (6% for self-employed) and 2% on earnings above £967 a week. In future people aged 66 will have to pay them until they reaach 67. 
• Bus passes for free travel after 9.30 in the morning in most of England are linked to state pension age. 
• Means-tested benefits such as pension credit, housing benefit, and council tax reduction are all linked to state pension age. Once you reach that age they pay much more than is paid to people below that age who are only entitled to 'working age' benefits. Universal credit is less than half the amount of pension credit and comes with onerous requirements to search for a job even if that seems hopeless in your late sixties.
• The qualifying age for pension credit will rise with state pension age so mixed age couples will have to wait longer for the younger partner to reach it.
• Many company pension schemes and some older public sector pension schemes still pay out from age 65 - or even 60 - leaving a longer gap before the state pension kicks in. 
• Attendance Allowance can only be claimed from state pension age. Younger people must claim Personal Independence Payment (PIP) which is the same amount but can be more for those with mobility issues but which has different tests for entitlement.

Data from the Office for National Statistics shows that the delay will affect around 600,000 people who reach 66 each year and approximately 5000 men and 3000 women will die at that age before they get their pension. 

The Office for Budget Responsibility estimated in 2025 that the total net savings for the Government from the change would be £10.5 billion in 2029/30.

Don't blame the present Government it was all laid out by George Osborne in the Pensions Act 2014 which brought forward by eight years the rise to 67. He boasted how much money he was saving the Government from a succession of pension age changes. They are all set out in these timetables.

Paul Lewis

29 September 2025

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Winter Fuel payment 2025/26

 

WINTER FUEL PAYMENT 2025/26

 England, Wales, and Northern Ireland

Qualifying

·       Everyone aged 66 by 21 September this year – born 21/9/1959 or before – will get the Winter Fuel Payment in Nov/Dec 2025. It will be paid automatically into your bank account without a claim. Ignore any emails or messages inviting you to claim it. They are from thieves. Don’t click on any links and delete them. 

·        However, a very few who have not claimed their state pension, have never worked in the UK, or have legally arrived in the UK recently may not be known to the Department for Work and Pensions. They will be missed and will have to claim. You can’t claim yet. But later in the year go to gov.uk and search ‘winter fuel payment’. The deadline is March 2026

·                How much

      The Payment is £200 per household where one or both is aged 66 to 79 and £300 if one or both are over 80 - born 21/9/45 or earlier.

·        Couples not on means-tested benefits will get half each, so either £100 or £150 each. Though if one is over 80 and the other not the older one will get £200 and the younger £100.   

      For a couple where one claims a means-tested benefit, the whole amount will be paid to that person

·        People in care homes will get the Winter Fuel Payment as long as they do not claim any means-tested benefit there. They will get the half payment - £100 aged 66-79 and £150 aged 80 or more. If they get a means-tested benefit they will not get the payment.

People living outside the UK cannot get the Winter Fuel Payment. In Winter 2023/24 and earlier it was payable to some people in the EEA and before that in parts of the EU and before that throughout the EU, but that is no longer the case.

Taking it back

·        Individuals who get Winter Fuel Payment who have a taxable income above £35,000 in 2025/26 will have their Winter Fuel Payment taken back in full through their income tax in 2026/27. That will normally be done through their tax code if they have one. It will be reduced so that they pay back a twelfth of the payment each month from April 2026 to March 2027. That will mean extra monthly tax of £16.67 if they get the standard £200 payment. The details of how the tax code itself will change have yet to be announced. 

      However, people who already complete a self-assessment form will not have their tax code amended but will repay the winter fuel payment in full with their first tax payment for 2025/26 which is due by 31 January 2027 at the latest. As far as I can see their tax return will be prepopulated with the repayment. They should check that their tax code on a pension or earnings has not been adjusted as well. 

      The few people affected who neither have a tax code nor do self-assessment will repay the Winter Fuel Payment through the simple assessment procedure which collects the tax they owe. HMRC says it will be done automatically without the need to register or take any action. 

      In 2027/28 HMRC plans to take back the winter fuel payment from 2026/27 and 2027/28 even though the income for 2027/28 will not be known when it is recovered - as set out here see 'winter payment'. That means that it will be taking back two winter fuel payments only one of which will have been received. HMRC says any errors -- for example if income falls below the £35,000 limit in 2027/28 -- will be corrected through the tax code. It plans to recover the payment in years from 2028/29 from the April before the payment has been received. The law implementing this recovery scheme has not yet been published still less passed by Parliament.

·        Taxable income includes all money that counts, or could count, towards income tax due in a year. State pension, earnings, pensions from a job, retirement annuities, personal pensions, taxable drawdown from a SIPP, taxable social security benefits such as widow's benefit, carers allowance, and incapacity benefit, rental income (but not up to £7500 a year from rent-a-room), interest on savings, and dividends will all be counted. Savings interest and dividends are counted in full including the amount within the £1000 or £500 personal savings allowance or the £500 dividend allowance. Interest on ISA savings and dividends on ISA investments are not taxable and do not count as taxable income. Nor does any profit made on trading or property covered by the £1000 trading and property allowances. Premium Bond prizes do not count as taxable income. Capital gains are not counted as income. Non-taxable benefits such as attendance allowance will not be counted as income.

     Paying into a pension or giving money to charity will probably not reduce the taxable income that is counted. No question is asked about either on the official calculator. However, there may be circumstances where it might. The rules have not yet been published. 

·        There will be no assessment of household incomes. So a low-income husband may keep £100 and his high income wife may have her £100 taken back through her tax. Or £150 if both are over 80.

·        There will be no assessment of capital so the value of a home or savings or investments or property will not be counted. So some ‘millionaires’ in the broadest definition will still get it even if their home or savings or both together exceed £1 million but their individual taxable income is £35,000 or below.

·        Government says about two million will have it taken back and more than 9 million will keep it.

·        Government says the threshold of £35,000 was chosen to ensure all who need it get it and it is ‘broadly in line with average earnings’.

      You can opt out of receiving the winter fuel payment. The deadline for this year was 15 September and it is 10 October in Scotland. The Government revealed on 1 October that about 50,000 pensioners had opted out of the payment. The opt out window for the 2026 winter opens on 1 April 2026. 

·        Nine million pensioners to receive Winter Fuel Payments this winter - GOV.UK

Last winter, Northern Ireland implemented the pension credit means-test for the Winter Fuel Payment, but in addition gave £100 to every pensioner of qualifying age who did not get the payment.

·       This winter it will follow the England and Wales rules, the Communities Minister has confirmed.

·       Scotland

·        From this winter the payment will be called the Pension Age Winter Heating Payment. It will follow the new scheme in the rest of the UK but with payments of £203.40 aged 66-79 and £305.10 aged 80 or more. The extra amounts reflect a 1.7% increase on last year’s payments, in line with last September’s inflation which was used to raise other benefits. As in rest of UK the payment will be given to all and then recouped from those with an income in 2025/26 of more than £35,000. The mechanism for recovering the money will be the same as in the rest of the UK. The £100 payment which the Scottish government promised for all pensioners who don't qualify for winter fuel payment has been scrapped. Official gov.scot announcement here.  

      Future Years

      In 2026/27 and 2027/28 Winter Fuel Payment will be affected by the rise in state pension age. If the current rules are followed it is expected that for Winter 2026 the last date to qualify will be 27 September 2026 which will include people born 27 June 1960 or earlier who will be aged at least 66 and three months. In winter 2027 only people born 26 December 1960 or earlier will qualify and they will be at least 66 years and nine months. In future years people will need to be 67 by the week of the third Monday in September to qualify. The same rules are expected to apply in Scotland.

Paul Lewis

3 October 2025

Version 1.81

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ACTIVELY MANAGED CASH BEATS INFLATION

 CASH VERSUS INFLATION

Tell any financial adviser you prefer cash because it gives a guaranteed return and chances are they will tell you the only thing guaranteed is that you will lose money because it will be eaten away by inflation. And if you reply 'yes but I don’t want to take a risk' the response will be that there is a risk with cash – indeed a certainty – that your savings will worth less in real terms when you take them out than when you put them in.

This research shows that advice is generally wrong, at least for those who actively manage their cash deposits. So financial advisers should be very cautious in telling clients those things. It may be seen as not treating them fairly or fulfilling their consumer duty. This blogpost will help them get it right.

The numbers

Cash returns and inflation can be measured precisely over the past. Some numbers go back to the 1990s and there are detailed figures for the whole of this century. But there are choices to be made.

First, how do we measure cash returns? On the face of it there is a plethora of different ones. Every bank and building society decides on the interest rate it pays and the latest Moneyfacts for May 2025 devotes ten pages to around 150 different institutions which can each offer 80 or more rates on different sorts of savings. Even its Savings Selection page of the accounts with the highest rates has eight tables with a total of 304 cells each of which can show a different rate.

So Active Cash™ - which I trademarked in 2016 - has one simple rule. You pick the best one-year fixed rate deposit account - often called a bond - and when it reaches its term use the money from it to buy the best bond then. It is a simple rule and takes just a few minutes once a year to implement – go online and find the best buy one year bond and put your money in it. With faster payments the money can come out of one bond and go into next year’s choice on the same day.

The figures used in this analysis are from Moneyfacts ‘Savings Selection’ page. They are the best rate in the '1 Yr' column of the table for fixed rate accounts. I am grateful to the money data firm for giving me access to the rates paid on the best buy one year bond each month from January 1995 – more than 30 years of data. They can be found here.

Second, how do we measure inflation? The Retail Prices Index (RPI) was the preferred choice until April 2011 when George Osborne changed the official measure to the Consumer Prices Index (CPI). Nowadays the Office for National Statistics (ONS) boffins prefer CPIH which includes housing costs. For simplicity, I have picked CPI which ONS has back-calculated as far as we need it and the monthly percentage rise in prices over the previous 12 months is easy to download from the Office for National Statistics website.

With those choices made, comparing Active Cash™ rates with CPI inflation needs just two columns of numbers for each month.

The comparison

For each starting month I have calculated the return on Active Cash™ over a set number of years and compared the return with the rise in the CPI over that same period. If the total Active Cash™ percentage return is bigger than CPI then at the end of the period your money is worth more. If it is smaller then it is worth less. I picked one, two, three, four, five, and ten years.

For example, if you put £1000 into the best one year bond in October 2003 the interest rate is 4.6% so by October 2004 it would be worth £1046. But inflation over that period to October 2004 was 1.2% so the real value of your money after a year is £1033.60. If you then go on to put that £1046 into a best buy one year bond and again and again over five years by October 2008 your £1000 would have grown 30.616% to £1,306.16 but inflation over that period was 13.109% so the real value of your £1000 after five years was £1154.78 a real terms increase of £154.78. Over ten years the real terms increase by October 2013 would be £223.65. The calculations show that for any starting month before March 2009 and over any of the periods Active Cash™ beats CPI inflation.

For later years that is no longer true. Put £1000 into the best buy one year bond in July 2020 then the real value of that after one year would be £991.18, after three years would be £874.43, and after four years would be £906.95. So it is clear that with some starting months your cash will grow in real terms but in others it will shrink.

Over time

To see the outcome over many years I picked two periods – this century which means buying a one year bond starting each month from January 2000. And the last sixteen years – doing the same from March 2009. That month was picked because it is the first for which the return on Active Cash™ fell below inflation. From that date the calculations show many starting months when it beats inflation and many when it does not. It is a simple matter to count each outcome.

From January 2000 Active Cash™ beat inflation in all five periods of 1, 2, 3, 4, 5, and 10 years. The worst period was 2 years at 71% of the starting months; the best was 85% of the starting months over ten years.

Taking the first quarter of this century, the average real (after inflation) return on £1000 invested each month is a compound increase of around 1%. So active cash does beat inflation.

From 1 March 2009 Active Cash™ also beat inflation in all five periods. The range was 51% (two years) to 64% (five years) of the starting months. In other words, stick a pin in a random start month and a random period and Active Cash™ is more likely to beat inflation than not.

From January 1995 to February 2009 Active Cash™ beats inflation in every single starting month over all five periods for as long as these records go back. So before March 2009 cash managed this way always beat inflation.

From March 2009 the results become mixed. The financial crisis of 2008 led to a period of high inflation and then historically very low interest rates and there was very high inflation in 2022. So there are blocks of time where cash does not beat inflation.

Now in 2025 we may be entering a different and more normal era. From August 2022 Active Cash™ beat inflation over two years for every starting month. And over one year for every starting month from November 2022 buying a best buy bond has outperformed inflation. In that month the best buy bond paid 4.5% and when it matured in November 2023 inflation over the 12 months it had been held was just 3.9% so it beat inflation and that has been true in each of the eighteen months since up to April 2025.

When an adviser tells you that you are bound to lose money in real terms with cash it is simply not true overall if you manage it properly. And for that, Active Cash™ is the key.

FURTHER ANALYSIS

Behaviour

The biggest problem with this analysis is that Active Cash™ is not how most people behave. If you leave your money languishing in an average account either as a one year bond or in an easy access account then the figures are very different.

Easy access is generally the worse. Using Bank of England figures for what it calls ‘sight deposits’ which you can take out whenever you want and which pay variable interest rates, the best that cash can do from 2000 is beat inflation 43% of the time over one year and the worst is just 8% of the time over ten years. Since March 2009 it is better at the most for only 14% of the time and over longer periods it is never better. This analysis assumes that the interest paid remains at the average for the whole 12 months. That is not normally true but the effect is unlikely to change the overall picture.

There is £280 billion in bank accounts that pay no interest. That money is indeed guaranteed to lose its value over any period, even one month.

Buying an average one year bond each year does better than average sight deposits, but of course not as well as buying the best. Using Bank of England numbers for the average rate paid on one year bonds you would still beat inflation for bonds bought in most months of this century – 52% to 59% of months would do that depending on the period over which you did it. But from March 2009 the figures are much worse. Over ten years a bond bought in any starting month would not beat inflation and over the shorter periods only between 38% (one year) and 14% (five years) would beat inflation.

Protection

People with a lot of cash savings face another problem with Active Cash™ – there is an £85,000 compensation limit if the bank or building society where their money is saved goes bust. Very cautious people split their savings so that no bank or building society has more than that in it. That means of course that not all their money can be in the best buy account. However, the difference between the top five is not great – it currently ranges from 4.52% to 4.4%, all still comfortably above inflation which has just hit 3.5% and which the Bank of England predicts will stay high this year before falling again. In December it is expected that the deposit protection limit will rise to £110,000 so people with £500,000 will be able to safely earn above inflation increases in their cash deposits spread over the top five accounts.

 

Tax

The figures take no account of income tax that may be due on the interest. For basic rate taxpayers there is a £1000 tax-free savings allowance and they would need more than around £22,000 in savings to currently earn enough interest to exceed the £1000 allowance where tax is due. For a higher rate taxpayer the figure is half that as the allowance is just £500. Tax could be mitigated by using Active Cash™ techniques on cash ISAs where the interest is all tax-free. But there is a limit on putting money into a cash ISA - currently £20,000 a year. And no long-term data is available to allow the ISA calculations to be done. Cash ISAs currently pay interest at very similar levels to taxable savings accounts but that has not always been the case.

Inflation choice

CPI was chosen because it is the current standard way of measuring inflation. The calculations could also be done using

•        RPI
•          RPI until March 2011 and CPI from April 2011
•          CPIH as back calculated by ONS.

Putting these rates into the calculations does not materially affect the outcomes overall, though of course with a measure that gives higher inflation, Active Cash™ beats it less often.

Paul Lewis

Version 1.21 errors corrected and brought up to date with latest inflation (April 2025)

22 May 2025