Pensions and 'drip pricing'

This BBC podcast is supported by ads outside the UK. Make money predicting football. Now you can. Now in Texas with Calci. Calci is the only platform that lets you legally trade on real world events in all 50 states from football to Bitcoin, the Oscars, and even politics. If it matters, you can trade on.

Trade on who wins each game, props, spread, and more. Legally, now in Texas. Don't miss your shot. Download the Kalshi app or go to K-A-L-S-H-I dot com. Use code PODCAST and get $10 when you trade a home. This is an investment that carries risk. BBC Sounds. Music, radio, podcasts. Hello. Welcome to this Moneybox podcast. A finance regulator says Visa and Mastercard have put up the price of paying with plastic but made little improvements in their service.

Royal Mail confesses it took hundreds of thousands of pounds in fines from people who used barcoded stamps it says were fake. And have you been tripped by the drip? Extra items added at checkout, just as you're about to pay online. Well, it's been banned, but not just yet. But first...

At the end of just the first week of the election campaign, who was cheering? There's five more to go. Income tax, VAT and pensions have already featured in the party's plans. Last week, we asked you to contact us with the money issues you wanted. politicians to tackle. Lee Cowan from Worcester got in touch because she was shocked to find herself paying tax on her state pension for the first time, despite her income being low enough to be entitled to other benefits. Lee is retired, lives in

rented social housing and says money's getting so tight she may even have to give up. Well, I'll let her tell you. It was a bit of a shock because I knew I was going to have to pay tax, but it was more than I was expecting. It won't sound an awful lot. It was £200 altogether. I actually went on to look and see what would happen next year.

if the tax-free allowance stayed the same and realised that it could go up to about £400. It just seemed like an awful lot of money to be paying back when I'm on benefits and on a low income. I'd sort of been under the impression that the tax free allowance would go up. And what are your concerns for the future? I realised that I had to sort of make allowance for the fact that I'm going to pay tax next year again. I'll have to make cuts in other places.

I live fairly frugally already. And I think I'm good at managing my finances. I live alone. I've lived alone for many years. And I have a cat. And everything's going up, including cat food and cat insurance and vet bills. And it's like... Do I have to make a decision about whether I continue having a pet? And it just seems very unfair. that it's considered that if you've got an income of 12 570 pounds a year that you can afford to pay tax anything above that

Lee Cowan from Worcester talking to our reporter Joe Krasner. Well, Lee isn't alone. HMRC estimates that over 8 million pensioners paid tax last year, some just on their state pension. A couple of days after Lee told us her concerns, as if by magic... The Conservatives pledge to increase the income pensioners can have before they're taxed. For everyone else, the personal tax-free allowance will stay frozen until April 2028. But for the over-66s, it'll go up at...

the same rate as their pensions. That tax promise has not, well yet anyway, been matched by Labour or the Lib Dems, but they are committed to put the standard rate of state pension up each year by the so-called triple lock in line with prices. earnings or two and a half percent whichever is the highest we believe the snp is two but the conservatives are alone for now at least in linking the personal tax allowance for pensioners to that formula as well to help us make sense of all this

see how it might help. Lee Nimesh Shah is with me in the studio. He's the chief executive of accountants Blick Rothenberg. Nimesh Shah, why are more people like Lee on relatively low incomes paying tax on their pensions? Well, Simply Poor Paul, you mentioned about the frozen allowances policy, which has been with us since 22-23. Essentially...

Personal tax allowances and thresholds have been frozen under the Conservative government, and that's due to run, as you said, until April 2028. But in that same period, the state pension has gone up considerably because of the pensions triple lock, and the government did increase that. by CPI.

And so that's why one going up and the other staying frozen. Obviously, the one going up will overtake the frozen one eventually. Last year, about one and a half million pensioners, the Department of Work and Pension said, have a state pension already above the personal tax allowance.

How is this tax collected, though, from people on these low incomes? Well, it's a bit of a misnomer, Paul, that the state pension is not exempt. It is taxable. It is taxable income. So you add that into all the other income that you've had. The person that called in Lee, she may have had some other income in her world. You add that to the state pension and then you need to fill in a self-assessment tax return.

You would get a bill at the end of that and you'd pay that in the normal way by 31 January following the end of the tax year. Or HMRC may write to you in a simplified format and say this is the amount of tax you earn based on the information they have. And of course, if you have another pension or earnings, then they can adjust your tax code.

can't they but people like lee she was shocked she had to pay 200 pounds she thinks 400 pounds next year off this low income how can you prepare yourself for what for these changes well lee's doing exactly the right thing paul so she's getting ahead she's doing some maths and working out Now, this is the amount of money that I do need to set aside for my tax bill, so I don't have a surprise when that letter comes back from HMRC or when I'm failing in my tax return. I would say...

Definitely get prepared. Also, think about your other sources of income as well. A lot of pensioners will have some savings incomes, investment income. Think about whether they're using their tax-free ISA allowances every year as well. And if you're really, really unsure, there's lots of help out there.

to get through to HMRC and the phone lines as we know, but there are some charities that can help out like Tax Aid and Tax Help for the Elderly. And in future, if the Conservatives win, as I said, they're going to link the personal allowance to this triple lock as well. Explain the triple lock.

and how that would work and what effect it would have? Well, the triple lock, as you said, Paul, is basically protecting the amount of the state pension that will rise by. So average earning CPI or a minimum of 2.5%. They're calling this the triple lock.

plus by saying that pensioners will receive an additional amount on their personal allowance. As I said, personal allowances have been frozen. So they're saying that the personal allowance will increase. And in the Tory projections, they've said that it will raise to just over £14,000 by the end of the next year.

ex-parliament. That's worth about £275 for the average pensioner by that point in time. They're saying in the first year of this policy it'll be worth about £100 extra to the pensioner. And so 8 million pensioners will benefit from this.

paying tax, how many of them might it take out of the tax net altogether? Well, we've seen a little bit of research around this already, some quick off the mark. So we think it's about three quarters of a million people that will be taken out of tax completely on it. depend on how much the state pension goes up by. These are projections that's assuming the inflation numbers will stay around the two and a half percent over the next parliament but we just don't know.

Now, there's a consensus among politicians, as I said, that the triple lock on the state pension is a good thing, capital G, capital T. But economists aren't so sure, are they? Several are saying it's unaffordable. And now there's going to be this extra cost. of the personal allowance if the Conservatives get the opportunity. Yeah, that's right. It costs a huge amount of money, Paul. So some estimates put the cost of just the triple lock alone at about £10-11 billion a year.

Add on top of that this triple lock plus element. The Conservatives are saying that's going to be another two and a half billion. Apparently that's going to come from raising money through tackling tax avoidance. Yes, we'll see how that goes, and obviously it depends absolutely on the election on July 4th. Nimish Shah, thanks very much from Blick Rothenberg. And do let us know what money worries you would like politicians to tackle by emailing moneybox at bbc.co.

Now, every time you use a Visa or MasterCard to pay for something, the business you're buying from has to pay them a fee. But the payment systems regulator, a watchdog for the payment industry, has found the fees charged to shops and other businesses have risen 30% above the rate of inflation in the last five years. It says there's little evidence that the service provided has approved a lot.

Along with that, Visa and MasterCard dominate 95% of the card payments market, so businesses have almost no choice but to accept these charges, which, of course, ultimately they pass on to us through higher prices. market to speak to shoppers and first to traders.

If you don't take money in a business today, you've got to take a card. It's every transaction there's a cost. So what does that roughly work out at? It depends which one you use, but the one I'm using at the moment is about 0.6 per transaction. No, I don't take card pay. payments. I'm trying to keep my costs as low as possible and I don't feel I should give them a cut of my profit. What percentage do you pay to the credit card companies? 1.67%. Yeah, a lot. Charge more.

And would you prefer to use cash then? Yes. Why? Well, I don't pay 1.67%. I see you've got a card. Why do you prefer to use a card? Because I don't have to mess about with notes and waiting for change. It's quicker. Which do you prefer to use? Cash. And why is that? Well, I'm old and I've always been used to it. Can't do it. these new fundal cards and things.

People in Bury Market. Mastercard told us it disagrees with the findings of the review and points to the big investment needed to ensure the payments network is secure, adding that the payments industry has never been more competitive. a similar point about the costs of delivering a safe system and says its fees reflect the immense value, as it put it, that it provides to financial institutions. Now, listening to that is Professor Bernardo Batiz Lasso from Northumbria University.

business school, an expert on these kind of payments. Bernadette Batis-Lasso, let's deal with that competition point first. 95% of payments go through one of these two firms. Is there really competition? Thank you for having me Paul. The best and simplest way that I can explain this is that you have to think of the payment systems like a big bowl of spaghetti.

And you have loads of people coming in. And think of a fintech company like a noodle. So it's connecting two points. Visa, MasterCard, the financial institutions have a big chunk of that spaghetti. But it's a very complicated... financial infrastructure yes ultimately no ultimately is there competition between them though as they say ultimately there are two credit card companies that dominate payments across the world although they change

They charge merchants different fees for the different type of services that they offer. Yes, I mean, we heard from those two traders that we heard from in Bury Market. One was paying 0.6%. They said another 1.67%. Is it hard for traders to know even what they will be paying? I think that is a great question because there is no clarity for merchants, but more importantly, there is no clarity for consumers of what is the cost, including the sustainable, you know, the green food.

charge of using alternative means of payments as your some of your interviewees said this is more convenient but what is the cost of that convenience that is not clear for the ultimate consumer No, no. And of course, we don't bear the charges directly, but you can be sure that they'll be passed on to us at some point. And of course, we heard about people preferring cash, but even cash has costs associated with it, doesn't it?

Even cash has costs associated for it, but the consumer doesn't know. Now, at the same time, it's not a surprise that, roughly speaking, in most countries, 40% of new fintechs... are in the payment space. So every time that you use a card, every time that you use an app, there is somebody, you don't know how many, in between you and the merchant. And one of your interviewees said,

I don't want to share my profit. Every time that you're using somebody, you are sharing and you are paying part of that. Yes. And what was it the payment systems regulator was unhappy about that it made it decide to look into the two firms? Well, I think the payment system regulator has been very clear.

They are talking of the multiple firms, sorry, of the multiple fees. The one that has received most attention is what is called the interchange fee, which is what it takes to go into the clearing of the payments. fee which the regulator is looking at now is the one that the card companies charge directly and that has received less attention in the UK and in other countries. It has made a clear point that in five years

the fee has risen for 30% and they don't see evidence that the consumers or merchants are receiving anything in return. Just as a reference, sorry. Now, I was going to say they do say, though, that they have to keep investing because we want these systems to work perfectly, don't we? So they say they have big investment costs. Is that a reasonable argument? It is a reasonable argument, but it's also evident that MasterCard, for example,

The stock price of MasterCard has risen since 2010 until the present 17 times. And in the last five years, its stock market price has outperformed the market. By 16, that's 1.6%. So they're doing very well out of this. Just very briefly, Bernardo, do you think this investigation is likely to make any real difference to these charges, in a word? To the charges, yes. To the final consumer, no.

Professor Bernardo Batiste Lasso of Northumbria University's Business School, thanks. And if you want to give your views to the regulator, the closing date for submissions is July 30th. Just search PSR Card Scheme Review and you'll get there.

Now, you may remember our story a few weeks ago when a listener told Moneybox she had to pay Royal Mail a £5 fine to collect her own Mother's Day card because Royal Mail said the stamp her daughter used to post it was fake. have now been suspended by Royal Mail, but not until it had raked in a lot of money in just nine months. Sandra Hardy all has the details.

Yes, in a letter to the Business and Trade Committee seen by Moneybox, the Royal Mail revealed that between July 2023 and March this year, it collected fines for roughly 158,000 items that were sent using counterfeits. stumps. Those fines amounted to around £686,000. The Royal Mail said that it does not profit from those surcharges. Instead, that money covers their costs and foregone revenue. But wasn't the point of these new barcoded stamps to cut...

down on the number of counterfeit stamps in circulation? Well, the Royal Mail says they have and that counterfeit stamps now account for a fraction of a percent of the 450 million stamped items it receives each year. That's come down by 90% since barcoded stamps were introduced last year. And for anyone who's listening, who's buying or using a stamp, how do you spot a fake?

It's almost impossible to spot them, so it's worth remembering that you can only buy official stamps from some supermarkets, stationery shops or your nearest post office. And you don't need a stamp if you buy postage online from the Royal Mail. Fake stamps are often advertised online, with bargain pricing and shipping deals to lure people in. So beware of them. Thanks very much, Sandra. And if you've unwittingly bought fake stamps, you can report it to Royal Mail via its website or by calling.

worst that will happen for now is Royal Mail will put a sticker on it saying fake.

New laws passed just in the nick of time before Parliament was dissolved will mean the end of many unexpected extra charges being added on when you buy things online. You know, you've shown the price for a room or a ticket, but when you check out, there are additional costs.

My favourite or least favourite is a delivery charge for e-tickets that are just sent to my phone and I have to print off, but I'm charged for it. Government research suggests shoppers are charged over £2 billion a year by transport, hospitality and energy. entertainment businesses money what's listener jim told us he got caught out when booking a hotel room the advertised price was 56.99 and um i've been on this stayed at that price before and no problems good hotel everything

And went through to the authorisation part with my credit card. And then it came up transaction complete. And they put what they called local taxes and booking fee. And the fee went up from £56.99. in 91.46 and I'm like hold on a minute that's about 40% more than the advertised price and it's got it's got local taxes I don't think there's any local taxes in Sussex

Moneybox reporter Sarah Rogers has been looking into these plans. Sarah, will the new law stop people like Jim getting an unpleasant shock at the checkout? Well, what he experienced is known as drip pricing. You see, one price that might look cheaper than the same product elsewhere, but then other...

charges are revealed or dripped through the buying process. In Jim's case, he said he didn't notice until he got the receipt and saw that it was £35 more than he expected. He's not the only one who got in touch on this. Here's what Phil told us about extra costs. buying concert tickets.

The first was a facility charge of £2.75 per ticket. The second was a service charge of £4.55 per ticket. And finally a handling fee of £2.50 per ticket. These charges amount to an additional 20% of the actual ticket price. So under this new Digital Markets Competition and Consumers Act, drip pricing is illegal and businesses will need to show these costs in the initial price.

quid or so but end up paying much more just to take a bag on board that holds more than a pair of pants or even to sit next to your family yeah so this law tackles so-called unavoidable charges so charges that you can't opt out of like booking fees.

Bags and seat reservations are not classed as unavoidable charges because as long as you're happy travelling light and you don't mind where you sit or who you sit next to, you can avoid those. I can just hear people shouting at the radio, Sarah. They sometimes like to sit away.

away from the rest of the family on an aeroplane. Now, this act is massive. It's not just this. What else is in it? It's pretty hefty, more than 300 pages. Also in here, rules to make subscriptions easier to cancel without having to take what it says are...

reasonable steps so if you sign up to a service online you should be able to cancel online or if you're on a free trial or you've got a special offer businesses will need to send you reminders that it's coming to an end and give you the chance to cancel it

The Act has been given royal assent, which means it is now law, but it's not going to be implemented until after the general election. Thanks, Sarah. Well, listening to that is Sue Davis. She's Head of Consumer Rights at the Consumer Organisation, which... Sue Davis, we've had an amazing response. They're still coming in, actually, to this from listeners who hate this practice but find it impossible to avoid. Have you heard any hints when these new laws might actually begin?

I think it's very difficult to say with the general election coming up, but we think it's an incredibly positive step that we've now got a ban on these types of prices that are added and dripped in, and it makes it very difficult to compare prices. There will be some guidance to explain just the scope of the new regulations.

But we hope that responsible businesses will recognise that they have to stop these practices that people find so frustrating and be much clearer about the total price of the product that you're buying. upfront. We would hope that maybe within six months to a year, we would see the legislation come into effect. A lot of these charges are online.

So it shouldn't be too complicated for businesses to stop this type of practice? No, not before time. In fact, Bill has emailed to say it won't apply to budget airlines, but he says I'm going to Madrid. It would have been cheaper to get my suitcase its own seat than pay for it to go in the hole. It is incredible how much it adds on to the cost. I mean, we found with event tickets as well that you get about an extra 20% added on. And it is unfortunate that things like airline...

tickets aren't included there's guidance still to come and so we hope that the government will look at that carefully and make sure that it's including things like delivery charges for example and some of these frustrating holiday fees. Yes I mean Phil certainly found that.

And also, I should say, Barbara says she spent another £45 on her Bruce Springsteen tickets just for service charges. It is extraordinary. Now, these extras, I mean, there was one for taxes in Sussex, which, as Jim said, he doesn't think... Will people know more what they're for? Will they be explained? I mean, they have to be told about them earlier, but will they say what they're for?

Well, hopefully by having to set out these charges up front, it will make businesses think about exactly what they're adding on. As you've heard from some of the emails, you know, you get things like you said about the e-ticket printing out charge, which seems ridiculous. You know, you can have venue levies, transaction fees, processing fees, delivery fees, a whole range of different things that are added when you wait.

into the process and you're unlikely to drop out after you know you think you're about to get your concert ticket or whatever so we think it should hopefully make businesses think more about these. Where there isn't a fixed fee, they'll have to explain how they're going to calculate the fee up front as well. So you should know that if there are additional fees that are then to come.

Well, that will all be very helpful when it happens. A report from the Department for Business and Trade did suggest it was used by more than half of the businesses in entertainment or hospitality and costing, as I said earlier, more than £2 billion a year to customers. How easy will it be? to stop? Well, I think that we would hope that responsible businesses...

will comply. Clearly the legislation sets out that this is a practice that shouldn't be happening. The Competition and Markets Authority is also being given much stronger powers within this legislation, which is also something that WITCH has been campaigning for.

for a long time. And it will be able to take action without going through the courts, which is really important. So we hope that will be a big incentive for businesses to comply. And we have to hope they'll have enough resources to do that because, you know, there are thousands of these businesses.

and this is probably hundreds of thousands of websites to look at. Will trading standards play a role in this? Yes, trading standards will play an important role in enforcement, and there's been some long-standing problems as trading standards have faced a lot of pressures. where you live around the country, you may not have a very...

big service anymore. We think that the next government needs to take a much broader look at this. This act makes a big difference to consumer protection, but we want them to do a full review of trading standards and make sure that we've got a fit. a consumer enforcement regime that's really fit for the future.

Sue Davis of which, thanks, your emails are still coming in. Gareth said he had bought a new tyre and was charged a £25 booking fee. And then someone else rather cynically says they'll just come up with new scams to avoid it. Let's hope not. No drip pricing of extras if you subscribe to this Moneybox podcast, nor if you listen free to the live broadcast every Saturday at midday on BBC Radio 4. And there's just time to warn you that if you live in England and own a cat...

you must get it microchipped by Monday, June 10th. The new legal requirement applies in England for all cats over 20 weeks old. If you miss that deadline, you may face a fine of up to £500. Vets do the chipping and could charge you... £10-30, but it does last for the cat's life. All nine of them.

Email us with your money, chips or cheaps, moneybox at bbc.co.uk. We do read them all you might get on the podcast. And in this podcast, the team was Sarah Rogers, Neil Morrow, Sandra Hardial and Joe Krasner, studio manager, Lindsay. Akers. Our editor was Craig Henderson. I'm Paul Lewis and this was a BBC News money and work production for BBC Sounds. And now it can't sell its treasures but they can be stolen.

This is a story about one of Britain's most revered institutions and the theft of ancient treasures that were sold around the world. It felt like a real punch to the stomach. My God, things are being stolen from our museum. I'm Katie Razzle, and from BBC Radio 4, this is Thief at the British Museum. At the heart of our tale is an antiquities dealer turned amateur detective.

thrown into the centre of a global scandal. I was shocked. I remember that, thinking my hair stood on end. Search for Shadow World, Thief at the British Museum, on BBC Sounds. Make money predicting football. Now you can. Now in Texas with Calci. Calci is the only platform that lets you legally trade on real world events in all 50 states from football to Bitcoin, the Oscars, and even politics. If it matters, you can trade on.

it. Trade on who wins each game, props, spread, and more. Legally, now in Texas. Don't miss your shot. Download the Kalshi app or go to K-A-L-S-H-I dot com. Use code PODCAST and get $10 when you trade a This is an investment that carries risk.