What caught my eye this week.
While it’s been nice to enjoy the Mediterranean weather for the past week – ominous, but nice – we all know Bank Holidays in the UK are a cosmic long con guaranteed to eventually rain on your parade.
By Monday your family and friends will be watching you through the bifold doors as you valiantly cook sausages in the drizzle.
Or you’ll have had enough of the heat and taken to wedging yourself between the open fridge doors.
Or – the biggest prize of all – your sister-in-law will phone to say little Marcus isn’t feeling up to it today (translation: little Marcus got a better offer) and so their BBQ is regrettably cancelled, and so you have a blissful windfall Bank Holiday Monday to do with entirely as you please.
Which, naturally, means cracking out the iPad and a glass of something cool and reading about stock markets, mortgages, and ISAs.
Or – if that sounds too racy for you on a lazy Bank Holiday – what about something on taxes?
Sam Freedman has written a great article for the Financial Times [search result] about how the UK tax code got into such a mess:
This leads to the ridiculous situation where a London family with two children in full-time childcare would need to earn £150,000 before being marginally better off than they were below £100,000.
But once you start looking the incoherence is everywhere. There’s a VAT cliff edge, where companies can earn £90,000 a year before registering to pay the levy, meaning a significant number of small businesses find ways to restrict their growth to avoid going over the threshold.
Companies just over it are at a competitive disadvantage. VAT classifications are often arbitrary and subjective — as illustrated by a court case last year as to whether Walkers Sensations Poppadoms were in fact potato crisps (which are subject to the standard rate) or a non-potato snack, such as Twiglets or Skips, that are zero rated. Annual compliance costs are in the billions of pounds.
Politics, obviously, is largely too blame.
But what can you do about it? Nothing much. Except to start working early on your tax return this weekend instead of dining on burned-up burgers.
Have a great weekend anyway, whatever the weather!
From Monevator
A quick guide to asset classes – Monevator
The natural yield approach to drawdown – Monevator [Mogul members]
From the archive-ator: Holiday strategies to refresh a frugal soul – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
Home rents hit new high, even as asking prices fall – This Is Money
Millions of people reach retirement age with annual private pension of just £3,650 – IFA
Stamp duty changes knocked house prices in April, says Nationwide – Sky
UK exports suffer worst slump since Covid – This Is Money
The easiest countries to relocate to on a working visa in 2025 – Time Out
Nervous investors piling record amounts into cash, says Hargreaves Lansdown – T.I.M.
US economy shrank 0.3% in first quarter on Trump policy uncertainty… – CNBC
…but Trump blames Biden – NBC [US hiring is still strong anyway]
Significant cohort of UK voters remind us they can’t be trusted with scissors – or even to make a cup of tea – by voting again for Nigel Farage [I paraphrase] – BBC
UK among lowest-ranked countries for ‘human flourishing’, study finds – Guardian
Tourist charged £899 for two packets of sweets by Oxford Street candy store – Standard
Bookings for China-to-US shipping containers have plunged – Sherwood
Products and services
Sub-4% mortgage rates are on the rise… – Which
…with Halifax’s Best Buy two-year fix charging just 3.79%… – This Is Money
…and one lender offering to lend up to seven times your income – The Negotiator
Get up to £1,500 cashback when you transfer your cash and/or investments through this link. Terms apply – Charles Stanley
Vets could face temporary price caps on medicines in competition probe – Sky
Co-operative Bank switch offer: £100 + £75 – Be Clever With Your Cash
US target-date funds deep dive [US but relevant] – Morningstar
Get up to £4,000 when you transfer your ISA to InvestEngine our link. (Minimum deposit of £100, other T&Cs apply. Capital at risk) – InvestEngine
Do you know where your savings are really held? – Which
How the cost of learning to drive in the UK is accelerating – Guardian
NS&I’s one-year fixed rate bond now looks like a steal – This Is Money
Homes for sale with indoor-outdoor space, in pictures – Guardian
Comment and opinion
Vanguard: minimally extractive – Of Dollars and Data
Another retirement blogger retires from blogging – The Retirement Manifesto
Is UK house price growth a thing of the past? [Search result] – FT
A spectacularly under-appreciated 15 years for US stocks – The Big Picture
“I’m 100 and worked until I was 90 – retiring late is the secret to a long life” – i Paper
10% returns in the stock market – A Wealth of Common Sense
A method for maximising memories with money – Tim Maurer
Jonathan Clements: tasting retirement – Humble Dollar
“I won £50,000 then gambled it away in seven days” – BBC
Four key decisions for early retirement – Morningstar
Naughty corner: Active antics
Evidence shows active fund investors trade away some of their returns – Morningstar
The great European rotation – Verdad
Investing amid trade wars [PDF] – Sparkline Capital
The gold investment thesis – Advisor Perspectives
‘Stay humble, stack sats’: Strategy still buying BTC – The Block
Kindle book bargains
Liar’s Poker by Michael Lewis – £0.99 on Kindle
The Price of Money by Rob Dix – £0.99 on Kindle
The Great Crashes: Lessons from Global Meltdowns by Linda Yueh – £0.99 on Kindle
Failed State: Why Britain Doesn’t Work by Sam Freedman – £0.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
Solar panels to be fitted on all new-build homes in England by 2027 – Guardian
How the political consensus on climate change has shattered – BBC
The US can’t win the AI race without renewables – Semafor
People urged not to mow their gardens this May – BBC
Why whale urine is so important to life in the sea – The Conversation
Ozone gas to clean River Teme in UK-first project – BBC
Robot overlord roundup
Duolingo launches 148 courses created with AI despite contractor backlash – TechCrunch
AI versus free will – Life After The Daily Grind
When every employee becomes an agent boss – Tom Tunguz
Our last two moats – More To That
Top VC says AI will replace pretty much all jobs except his, which relies on his unique genius – Futurism
Not at the dinner table
The United States of Amazon – Kyla Scanlon
Breaking the silence – Scott Galloway [“Don’t look at me!” says Amazon]
Trump is the Godfather in reverse – Paul Krugman
The real cost of protectionism – The Pursuit of Happiness
How not to bargain – Drezner’s World
MAGA doesn’t build – Noahpinion
Timeline of how Trump is roiling US science and health – StatNews
Off our beat
Why Margin Call remains Wall Street’s favourite movie – Semafor
Status cheats – The Garden of Forking Paths
The best IKEA hacks of all-time – Standard
Why Trump can’t build iPhones in the US [Cool visuals, search result] – FT
A Ukrainian journalist’s detention and death in a Russian prison – Guardian
Predictions aren’t always about the future – Tim Harford
Date-less? Maybe one of these reasons is why – Don’t Worry About The Vase
FT veteran Martin Wolf on playing whack-a-mole with online fraudsters – FT
Why is Canada’s population so concentrated? – Uncharted Territories
And finally…
“It is only necessary to be six inches taller than the other people in a room to see above everyone’s heads.”
– Jim Slater, The Zulu Principle
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>Or you’ll have had enough of the heat and taken to wedging yourself between the open fridge doors.
We’re so poor we can only afford a fridge with one door.
I went through the process of crunching the numbers on childcare and the various tax implications last year and it really was astounding how painful the intersecting and overlapping tax penalties can be.
For us it was a no brainer to reduce hours, and we weren’t even caught by the £100k trap.
I do wonder how many more parents would be salary sacrificing into pensions if they only understood the implications better.
“ Significant cohort of UK voters remind us they can’t be trusted with scissors – or even to make a cup of tea” make you seem snarky and childish. I’m sure it won’t make a difference to you that you are out of touch with many millions who are hugely dissatisfied what has happened in the last ten years in the UK. Like some labelling all reform voters as thick racists, will never understand and probably be happy in not to even trying.
Sorry to be the first pedant to comment this week but, as any memory of your school physics will confirm, opening the fridge door might give you a short blast of cool relief but will ultimately make the kitchen even hotter.
Also typo, “Politics, obviously, is largely too blame.” Should be ‘to’.
It’s astounding how many people are managing income down in some way due to these cliff edges in the current legislation.
The £100k barrier can be extremely costly with 60% effective tax and a loss of 30 hrs funded childcare and “tax free” childcare. An extra £1 can lose you several thousand in support.
I’m at the extreme end currently paying 40%+ of salary into a pension until my youngest starts school year after next. Fortunately I’ve planned ahead with carry forward etc.
My workplace is full of people in a similar position. Talking it through with a few more open individuals it seems none of us are against paying our way. We recognise how fortunate we are to earn good salaries but the rules make it such a cost that people will work hard to avoid it. I’m sure the government would receive more in tax if these thresholds were made more progressive.
@Gary — They trusted Farage and his lies in 2016. We got nothing to show for it except lower growth and the inability to live in 27 other countries. They didn’t even see immigration come down.
Now they’ve voted for his claptrap again.
One time you can put down to excessive gullibility.
The second time we have to look for other adjectives.
Scottish Government, “60% tax cliff? That’s nothing! Hold my beer….”
Perhaps Gary it would be helpful if you realise that Liberals and Conservatives can both be ardent capitalists but have opposing political views on how to achieve their desired utopias
I came rather late to this realisation having learned my capitalistic (investing) skills via the FT,Bloomberg,Telegraph etc amongst others but then noticing that the FT and Bloomberg go politically Left while the Telegraph goes Right etc etc
Monevator goes Left-his privilege-his blog-so no use kicking against the pricks -just enjoy the great financial advice and deal with any political views accordingly
Interestingly I have noticed that the Stockmarket reassuringly proceeds on its merry way-upwards mostly totally independent of Right or Left political policies
A lesson for all of us?
xxd09
The tax traps are particularly painful for landlords (I know tiny violins etc) due to the Section 24 tax change which means you can’t take mortgage interest off as a cost (you do get a 20% tax credit on mortgage interest but this is worked out after everything else). You could only be making a small profit on your rental property and see yourself lose all child benefit and so on. I’m considering reducing to 4 days a week at work, childcare costs are so expensive it probably makes more sense to just look after the kids 1 day a week, pay less tax, and keep more of the child benefit. It’s a bit ridiculous.
Also Reform, what a joke, looking forward to seeing how inept that are at actually governing. In a way it’s good they’ve only been given the limited responsibility of local government so we can see how bad they are before they have a chance at winning power at the national level. That’s my optimistic take anyway.
Thanks for the heads up as to why Duolingo has been enshittified of late, I’ll let that go. AI ain’t worth paying for, and four weeks of plugging away at Italian from a standing start didn’t really help me much in the field. Whereas 5 days in Venice did.
Duolingo never taught me whether Italian has a formal you, where I suspect that lei is used for the formal from what I heard
I’m with Ed. There’s nothing that AI can’t make worse, it seems. This is going to be the mother of dotcom busts when people finally realise that LLM content trends to pablum that isn’t worth buying.
@xxd09 – My take is a bit different to yours. It’s that the Libdems, Labour and Conservatives are all ardent SOCIALISTS and that they engage in theatre to disguise their shared deisred utopia.
@BBlimp, lol yes people do regret Brexit by a factor of 5 to 1. Even Farage said Brexit has been a failure. I’m guessing Reform Regret (I should copyright that) will be a thing soon enough!
@ermine #10 re: “with Ed”: LLM scaling (once pre and post training scaling’s exhausted) will be a bust, but there’s other approaches to ‘AGI’. Alphabet’s AlphaFold used Deep Learning (and just a couple of hundred GPUs) to reveal the folding structures of 200 mn proteins across 1 mn species, where in 60 years previously only 170,000 structures had been found manually. There’s also neurosymbolic language approaches, like LLM arch sceptic Gary Marcus champions. The problem is: are we even climbing the right mountain with LLMs? Suspect not.
@xxd09 @Algernond — You guys discussing Farage in the context of economics is hilarious, quite frankly.
Again, in 2016 Farage proposed Brexit would come with big economic benefits.
£350m a week for the NHS. Blossoming exports, manufacturing, and trade deals. Growth unlocked when we exited the EU.
Anyone remember all this nonsense?
Apparently the voters don’t, but I do.
Everyone sensible who knew anything said this economic stuff was bogus nonsense. Leave voters ignored the ‘experts’.
Maybe it was reasonable then for people who knew little to believe all this rubbish but it’s not rational now after NONE of it has come true.
None of it!
As I always say, it’d be one thing if we were having a debate about, say, a smaller City of London post-Brexit versus an improved NHS or losing our freedom to live and work in Europe versus an industrial renaissance in the North.
But (completely predictably) we have got nothing to show for it. Only worse trade terms and less freedom to live across Europe and macro-economic damage.
And then you have people like @Gary charging that I don’t understand how bad the last 10 years has been for some people and how angry they are.
Yes I do. I warned against this!
I am acutely aware that the last ten years have been rubbish, the UK economy is at least £100bn poorer and tax receipts £40bn smaller annually because of Brexit.
I know we had easily two of the worst PMs in British history directly because of Brexit, which they both ardently supported!
If I had voted for Brexit/Leave on the back of Farage’s lies and witnessed this I’d be:
(a) angry at Farage
(b) never vote for him again
(c) have a bit more humility
But not Leave voters. What do they do when faced with the outcome of their bad decisions?
They vote for Farage again.
Given this, they are either incredibly gullible, pretty short of skull-based processing power, or — in fact — the economy and so forth is all just hot air and what they really want is a Far Right leader running the country for the non-economic / cultural reasons.
If the latter then voting for him is rational, but it’s a shame they are too gutless to admit it.
I have voted for both Labour and the Tories. They are both semi-competent parties operating at times with leaders/MPs of varying qualities, who on some level try to do things that represent beliefs with a nodding acquaintance with reality. (E.g. direct redistribution versus trickle down laizze faire capitalism, with pros and cons of both.)
Populists and their supporters in contrast believe in fairy tales, and worse they’re of the Grimm variety.
@Howard – agreed there are undoubtedly use cases where various forms of AI can do well, protein folding being one specific case, it may enable us to do better science faster in other ways. However, as a universal panacea to ensure that Big Tech can continue to aggrandise, not so sure about that at all despite the endless hype. I also worry about the misuse of the word intelligence…
@TI – I would never vote for Farage.
It’s possible to be ‘for Sovereignty’ without being a fan of him or Reform.
@Algernond — Fair enough. Yes, the old Referendum party was that, but of course that never got more than a very minority share of the vote. At least it was intellectually coherent though.
Edit: Forgot the name of this 30+ year old party, fixed now!
If you are 100 you can point to any aspect of your life and say it’s “the secret” and in your case you might be right. Jeanne Calment died at 127 and never did a stroke of work (and even if she was her own daughter pretending to be her, the score is still 99 and no job).
Brexit…, Reform voters.
The thing is, Farage/Brexit/Reform wasn’t actually in charge, in government, in the execution of Brexit. So, in a way, Farage can, and does turn round and say that Brexit was “‘… done wrong, it wasn’t me..”. He’s ‘clean’ in the eyes of those looking for something that politicians, in the end, cannot provide. As for Brexit, I always saw it as lunacy. It was, and is. The people that I reserve an amount of contempt for are those who ever voted for Boris Johnson.., a charlatan, and proven liar.., of whom, as I recall, even his former editor at the Telegraph described as having only an occasional acquaintance with the truth.
I’ve never, ever voted Conservative. I was unaware of having any political views until shortly after a long ago General Election, my local newspaper printed a picture of me, one of two people who had reached the newly reduced voting age of 18, and voted in the election. At the time, I was a student working my vacation at the local paper mill. General labouring…, running away when carboyles of sulphuric acid shattered, slipping and sliding doing night work on swaying frozen pulp stacks, hooking bales up to an overhead crane.., etc ***. Also in the newspaper was an interview with the newly elected Conservative MP. I read it, and among all the promises there he pronounced that there was… “… no impediment to business in Somerset…”. A few days later, as I was in the local town, I walked over the bridge that spanned the small river that supplied the mill pond, and exited to the sea a few yards from where I stood. The river was running an almost luminous turquoise blue dye, foam splattered all across the river banks, everywhere. I remembered the MP’s words, and thought…”You’re certainly not wrong..”. And I’ve never voted Conservative.
I’m not politically active, but in 2017, the Labour party was not one that I recognized as a Labour Party. I joined as a supporter, paid my subscription, and voted for Jeremy Corbyn to be the leader. I’ve never regretted it. The new Labour government contains a large number of the individuals that, politically, I despised from those years ago, and surprise, surprise, the behaviour of the new government in the last 10 months is also hardly recognisable to me as Labour.
*** As an aside, the paper mill changed names over the years…, from Reed & Smith, to I think Reed International, to St Regis, to D S Smith, who eventually closed it down once they couldn’t wring any more profit out of it, and wouldn’t invest in it. About 2 or 3 years ago, the Safety people warned D S Smith about a number of very dangerous risks at another mill, in Devon. About a year later, an employee died a horrendous death there. The newspaper avoided the details, but it sounded like the poor guy had been crushed between the paper rollers. On investigation, barely a single one of the safety recommendations had been carried out.
@Wephway — The tax treatment changes re: property, combined with the stamp duty hikes, have indeed been epic. I’ve been considering buying, refurbishing, and selling a small flat just to see if I like the process, and basically you can’t flip it because stamp duty will eat most of the immediate profit. So that leaves refinancing and renting it out, but then like you say the economics are not great. It’s pretty profitable, thanks to leverage, but only really thanks to leverage. And a lot more hassle than a REIT or even something like Mountview Estates (https://monevator.com/better-than-buy-to-let-members/)
So that’s some more economic activity / housing refurbishment left wanting on my part at least due to silly frictional taxes.
@B. Lackdown — Very true, someone should compile a list of what all these oldest age people say. I’m a bit of a sucker for the clickbait when a new one gets the crown for their inevitably very short reign, and the only consistency seems to be a positive / optimistic frame of mind.
But who knows, maybe that only kicked in past 90?! 😉