The New ISAs

There are some significant changes that have happened with the Individual Savings Accounts (ISA) recently. The known ISAs are becoming New ISAs, or NISAs.

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The changes

Every person in the UK who is 16 years old or over has an annual tax-free ISA allowance which can be held in cash, stocks and shares, or a combination. This allowance has now increased from a maximum of £11,880 to £15,000. Furthermore, the rules before said that you cannot have more than half of your ISA allowance in cash (which meant £5,940), while now you have the right to have the whole lot in cash if you want so.

What is more, the new rules expand the array of things you can do with your money. Previously it was not possible to transfer past stocks and shares ISAs into cash but you could only transfer past cash ISAs into stocks and shares. Now according to the new rules you are allowed to move your ISA money either way.

So in order to choose what to do with your ISA, you have several ways you can go. For example, if you want to save into a cash ISA, you have four options to choose from.

Easy access ISAs allow to withdraw your money whenever you want without any penalties. Usually these have different interest rates which can either go up or down. Some of them even come together with an introductory bonus that usually lasts for a year. The lowest interest rates usually go with these ISAs. If you give a sufficient notice, you can withdraw your money with a notice ISA and thus, you can get a slightly better rate. Also, there are regular saver ISAs which offer you better rather, however only for a year. There is a maximum amount you can save each month which is equivalent to a twelfth of your annual ISA allowance.

You can find the best rates offered by fixed rate ISAs. The deal with this kind of ISAs is that you lock your money away for a certain period of time and if you access it early you are going to be penalized with a loss of some or all of your interest.

When it comes to stocks and shares ISAs, you have a variety of investments to pick from, such as company shares, index tracker funds, managed funds and bonds.

Nevertheless, make sure you shop around for your ISA because there are many different platforms and stockbrokers.

Pension Reforms Introduced in Budget 2014

The Chancellor George Osborne introduced major changes to pension rule which mark which mark the biggest transformation to the taxation of pensions in almost a century. 

Pension rules are being eased and thus, it will be more stress-free for people to redeem smaller pension pots and will no longer be obliged to buy an annuity with their savings. These changes caused a serious fall in the share prices of the main pensions providers, reaching numbers like 8% to 13% down.

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The Chancellor also initiated £20 million over the coming two years in order to develop a scheme providing advice with consumer groups and industry bodies. In other words what this means for people who are retiring is everyone who has a pension pot which could be used for purchasing an annuity will be eligible to receive a free and impartial face-to-face advice on the various options. This will also help people who are interested in buying an annuity to find the best possible deal for them.

Even though annuity rates have fallen by half over the last 15 years, most people still have little other options besides buying one. Some people thing that pension rules so far have shown a patronizing view that pensioners cannot be relied on with their own pension pots. Nevertheless, the Chancellor rejects this view and believes that hard-working people who have done the right thing all their lives need to be trusted with their own finances.

Most people who retire choose to buy an annuity with the money they have saved in their pension pot because this gives them a sense of security that they will have a fixed yearly income for the rest of their lives. However, in recent times there has been growing distrust with annuities because rates are falling and new deals are appearing all the time so sometimes staying with your existing pension provider might turn out non-beneficial.

However, the Government has announced that from this month people will be able to have a more flexible access to their savings.

Further changes include cuts in the amount of guaranteed income that  someone would need when he retires in order to access the so called flexible drawdown where you can draw off money from your pension pot. Currently, the sum has been £20, 000 per year while now after the changes it will be £12, 000 per year.

Therefore, Budget 2014 can be considered as bringing serious pension reforms. 

UK Households Plan To Cut Spending In 2014

According to Citizens Advice, more than half of the adults in the UK have stated that they plan to cut their spending in order to deal with the increasing household bills over 2014.

Statistics show that in general people are worried about the impact that higher bills can have on their finances and in order to minimize this negative impact, they are planning to cut spending.

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Hence, the government, several charities and the energy industry have planned the so called Big Energy Saving Week in order to offer assistance to consumers how to take practical steps to make cuts on their bills.

Overall, the areas where people plan to cut spending are food, energy bills and leisure time with family and friends. Some people even consider moving into a cheaper home. It is a fact that many British households struggle with their bills and even those that manage to keep up with their costs, face difficult periods from time to time. Some people have used overdrafts in order to pay their energy bills or have borrowed money from family and friends so that they can cope with the situation.

However, people need to consider other measures as well. For example, they can contact their energy supplier so that they can inform themselves about other tariffs and see if they are using the best one for their needs. Another idea is to insulate their homes and in that way they will use less energy. Those are just two simple alternatives to turning down your heating or using less electricity.

Furthermore, according to Citizens Advice, many people have looked for online advice about their energy bills or fuel debt problems. The rising cost of living will push a lot of people to cut back on essential necessities such as travel, energy, housing and food.

The UK Energy Secretary has stated that the recent recession has been the deepest in the peacetime history of the UK and as a result, many people have less money.  Furthermore, the government claims that it is its top priority to help those people who have problems with paying their energy bills. It works on reforms for the energy market by offering more supplier and thus, better deals for consumers. Also, it launches many new projects aimed at both individual households and communities groups in order to help them control their energy usage. It is important to educate people on how they can make their homes more energy efficient and thus save more money.

How to Stretch Your Budget

At some point in their lives, everyone needs to live on a budget and be careful about their spending. Here are a few ideas of how to make the most of your budget.

1.      Pack lunch from home and when you do your grocery shopping, buy snacks in big packages so that they will last longer than the single-packed snacks that are sold in smaller chains. By buying a lot of things at once, you also save on money for fuel!

2.      Try cheaper, healthier alternative snack items at stores like Trader Joe’s.

3.      Instead of buying coffee on the go from some of the big coffee chains, simply make a coffee at home the way you like it and bring it in a thermos. This will save you at least £5.

4.      You can save money from gas or transport by taking walks or riding a bicycle whenever possible. This is both a good exercise for you and for your walletimages.

5.      When go go shopping for clothes or shoes, first check the sales area or look for bargain clothes shopping destinations on the internet on some online guides.

6.      If you feel more adventurous, explore some thrift shops. You can find great deals there, for example £1 Sundays. You just have to have little patience to look through the unorganized piles and do little research beforehand.

7.      Make a strategy beforehand on your shopping. For example, a lot of holiday items go on sale immediately after the season has finished and this is the time when you need to hit the stores and store some items for next year.

8.      If you need some house items, it is always a good idea to check out some low-priced stores such as IKEA, Wilkinson, etc.

9.      Check out on the internet for free giveaway items that are free of any charges and fees and only have to be picked up, like furniture for example.

10.  If you haven’t been to a yard sale- give it a go. You never know where you may find something nice.

11.  Before making big purchases on electronics for example, do a research so that you know what are the best deals on the market and do not fall for the first thing you see. Sometimes big branches are not always the best deal for you.

 

Best Ways to Raise Cash at Little Cost

0% balance transfer and purchase card

Although this does not initially sound like the best way to borrow due to the fact that a balance transfer card will aid you in freezing debt rather than borrow further. However, some card on the market offer customers a 0% balance transfer as well the benefit of 0% on new purchases. The current best deal is being offered by Halifax by way of their All in One Online MasterCard. The card offers 15 months of interest free balance transfers and the same period of interest free new purchases.

Unsecured personal credit

Obtaining a personal loan has never been cheaper. With such a loan it’s easy to keep on top of payments as you are aware of the monthly brake down and a loan which you can take out of up to £15,000. Clydesdale Bank are currently offering the best deal on the market charging 5.1% on loan ranging from £7,500 and £15,000 over 12 to 72 months. The cost of borrowing £7,500 with the bank over a three year period would break down to monthly payments of £224.73 with the total amount which you will pay back being £8,090.28 (an interest of just under £600). An alternative loan may be obtained from Sainsbury’s who have now matched the 5.1% rate offered by Clydesdale.borrowing

Interest-free overdraft

Overdrafts are a quick, cheap and easy way to raise finance in the short term. Currently Halifax are offering £100 overdraft on their current account with 12-month interest free overdraft. Depending on your credit score and financial circumstances Halifax are willing to give its customers up to £5000 in overdraft. First Direct are offering customers £250 interest-free overdraft as well as £125 for switching. For those borrowers out there needing a quick short term loan a good way to go is for the 123 Santander Account which offers an interest free overdraft for up to four months. A word of warning, make sure to prior arrange your overdraft sum with your bank since hefty charges are often imposed.

The Government

If you are troubled with financial difficulty and have a poor credit score, then perhaps opting for a Government loan may just be the route for you. The coalition has a range of interest-free loans which are often helpful to those most in need. The Budgeting loan provides financial support for the purchase of essential goods such as clothes, the repayment of certain debts as well as for covering rent. The period in which the loan has to be repaid is 104 weeks which in essence is two years. However, the loan is for those most in need so to qualify you must have been receiving income related benefits for at least 26 weeks prior to taking out the loan.

Ways Not to Borrow Money When in Need

If you have a bad credit score or a troubled financial history than you will be more than aware of the difficulties of borrowing money. The problem is that when in need of money many of us will have no choice but to borrow from the few options we have which may turn out to be a costly mistake. Here are some of the most costly ways to borrow and once to avoid at all costs.

Payday loans

The famous payday loans which are advertised on our TV’s in which companies boast about a quick and easy service provide customers with a cash advance on your monthly salary. These are very tempting as indeed the applications are not difficult and the cash reaches your account within minutes. Further to the benefits, no credit checks are conducted meaning that anyone can in reality obtain a quick loan.

This lucrative quick and easy scheme of course however does not come cheap. The risk of lending to those less fortunate in society is covered by a high interest rate cost. In most circumstances lenders will charge you a staggering £25 per every £100 borrowed which adds up very quickly. The typical loan which may be £500 will cost the customer £125 in interest rates which is conditional on them paying back the loan in the first month.bad-credit-score-rating

Loan sharks

A loan shark is a person who illegally lends money without a licence. Loan sharks informally provide those in need with an informal loan meaning there is no paper work no credit check and no easy way to keep track of how much money you have left to pay. In addition, interest rates are often sky high and loan sharks tend to add charges whenever they feel like doing so. Further to add to the displeasure, if you are having difficulty with keeping up with your payments, loan sharks are known to use threats and violence to recoup their money.

Pawnbrokers

High street pawnbrokers lend you money in return for a security which you leave with them which is of a higher value of the loan you are taking out. The downside to this method of raising money is that you will be charged a high interest rate in addition to the risk of losing your higher value item which you left behind as security.

Choosing a Loan: 5 Aspects to Consider

APR

“Annual Percentage Rate” is a calculation that provides customers with an idea of the total sum being charged by a lender on top of the money they borrow. The amount is shown as a percentage of the amount that the customer has applied to borrow. This is an all-inclusive rate that takes into account both fees and interest that the borrower will have to pay back.

There are two types of APR – fixed rate and variable rate.
As the name suggests, fixed rate means the APR will remain the same throughout the loan’s length. This means that the repayments are likely to stay the same throughout the loan term.

Variable APR means that the rate charged may change. This can depend on a number of factors but is usually dependent on the rate of inflation. This means that the APR could change at any time during the loan, affecting your repayment amounts.

For many a fixed rate APR makes the process much easier to understand; knowing that they will be making repayments of one set amount which they agreed to repay before taking out the loan. A fixed rate can also help borrowers to budget in a more accurate manner than a variable APR.

E006253Repayment Period

If you are looking to gain funds via a payday loan lender, the repayment period is likely to be much shorter than other loan options.
If you are considering taking out a payday loan, look ahead. You should be able to see how much the total repayment charges will end up costing you.

Firstly, work out your monthly income and any other payments you are scheduled to receive. After this you will need to work out your expenditure. The extent to which you calculate expenditure is up to you – however it can be hard to predict. If you think you may struggle after paying back a payday loan, then avoid this option and consider a loan with a longer repayment period.

Impact on your Credit Rating

Some credit referencing companies are now using evidence of payday loan withdrawals as a negative impact on your credit rating.

Borrowing from payday lenders can suggest to some lenders and credit referencing agencies that the borrower is having trouble managing their finances and are having to find quick fixes – increasing their uncertainty of repayment, which is one of the key parts of determining a credit score.

Whereas payday loans may have a negative effect on your credit rating, other forms of finance (like guarantor loans) can have a positive impact on your credit file, providing each repayment is made on time over the course of the loan term.

Do You Understand the Language Used?

For some, the terms used by loan companies can be alienating. Abbreviations like APR – described in part 1 of this guide – can cause the most confusion.

If you do not understand any terms that are used within the loan application process, you should look to make sure you have understood what is being offered to you before agreeing to anything.

Free online financial dictionaries such as Investopedia can help you get a better understanding of financial terms. Alternatively, you can always phone the loan company in question to ask them about what certain terms mean for you specifically.

How Transparent is the Company?

Assessing how transparent a company is can be harder if you are using a comparison site to evaluate the options open to you. If you are using this method, it can be useful to visit the site of any lenders you are considering borrowing from.

The most reputable companies will be shouting loud and clear about how brilliant their products are in the effort to convince you to choose their product ahead of their competitors.

Some may go as far as to publish reviews from their customers on their own website. However, it can also be beneficial to check independent review sites like Trustpilot to get a bigger picture of the company’s conduct from the point of view of other previous customers.

How to make the most of your money on holiday

With news that exchange rates at airports for Euros to British Pounds have dropped significantly with £1 to € 1.01, it has become increasingly important for those traveling to reduce expenditure. This means it is now more important than ever to make the most of your money while away.

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If you are planning a holiday it is very important to book in advance, this can be the holiday package or even activities and excursions as you may also benefit from cheaper tickets by booking online. By booking early you may find deals that you can’t get closer to holiday, giving you greater financial freedom in the form of a budget.

One very important rule when on holidays is to always try to use cash rather than credit card, the last thing you want to be thinking about while on holiday is a credit card bill waiting for you to pay off when you return. One of the best ways to use a credit card abroad is to reserve it in the case of an emergency. Exchange some currency before you go at places where you find a good exchange rate and don’t have to pay commission; the post office and even some supermarkets offer this so the bank is not your only option.

It is always a good idea to have an idea of your budget when going on holiday, this way you don’t overspend and know how much you should bring with you on days out in order to make your money last the entire holiday. It is always best to estimate how much you will spend on food and drink as well as public transport if you need it, this way you don’t cut into the money that you want to spend on yourself.

A helpful budgeting tip before you go on holiday is to leave less room for gifts or souvenirs that you may buy on holiday.  This way you are forced to limit how much you buy simply through how much you are able to take back with you which has the added benefit of making your suitcase lighter which means you are less likely to incur fees at the airport.

Also it may be worthwhile to speak to locals whilst on holiday, as they are likely have a better idea of the best and cheapest places to go, as well as information on free places to visit whilst you are staying there.  Information read on the internet from other traveler’s about your chosen destination can be very useful too from sites like tripadvisor- you may find great money saving tips as well as advice about discounts and pre-bookable tours that are of good value and quality.

Written by Kate Matheson of PPIClaimsAdviceLine – there to help people refund their hard earned money.

Exploring Career Paths – Accounting

Accountancy is an occupation which is desired in several sectors. With the relevant qualifications and gradual experience it can provide a very high rewarding salary. An accountant is not only limited to one area of finance, jobs can be available in business and finance, in the public sector or the charity sector. There are also self-employed accountants who have their own firms dealing with clients on public matters.

Accountants like other professions can specialise in different areas such as tax, auditing, corporate finance, forensic accounting and business recovery and insolvency. Different fields can be explored during the training period to find the one which is suitable. The role of an accountant is not only dealing with numbers and making calculations, rather it is a job which deals with problem solving, team work and leadership roles. Accountants who work in departments such as audit will have to visit companies several times, and examine their finances on whether the business is making a profit or loss.

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Some accountants may choose to work for the public sector; this ensures that the government, both at local and national level are actually able to do what they intend on in terms of finance. The NHS for example relies on the tax payer’s money in order to keep on going, therefore accountants would be relied on to make checks and evaluate what would be best. Others in this field may wish to work in the private sector, dealing with businesses. Their aim would not be to benefit the state but rather to ensure the success of their clients.

This occupation if chosen can provide a balance with work and personal life, as not everyone is associated with big firms and fixed company hours. Many accountants work for themselves, the bosses of their own businesses and this can offer a flexible lifestyle.  Larger firms sometimes can offer employees the opportunity to work overseas which has benefits of its own.

Qualified people can find a range of vacancies in newspapers, online and with an accountancy recruitment agency.  The salaries vary according to type of work, sector, firm and location, although newly qualified accountants start off on over £20,000.  Many opportunities are also available for part qualified people too, and experience in finance also has its own weight.  Also, although we are in challenging economic times, the prospects for those people in this sector remain positive.  The ACCA/IMA Global Economic Conditions Survey found evidence that hiring levels were higher for finance roles than for other disciplines, and that redundancy levels have been lower.

Making Contracting as Stress-Free as Possible

Going it alone

These days, the number of people in the labour force who are working as freelancers or contractors is on the rise.

Contractors work in all sectors, from construction to the creative industries and technological fields, as professional consultants or even as high street temps offering administrative and secretarial services.  More often than not, such independent workers are obliged to take care of their financial matters themselves rather than enjoying the benefit of a company accountant.  This can be a daunting prospect.  Everybody wants to get paid in full and on time and nobody wants to get on the wrong side of the taxman!

To assist in processing the unique red-tape needs of workers going it alone in their particular field, entities known as umbrella companies do the job for a modest fee.

 

Leaving it to the experts

An umbrella company offers a range of accounting services to contractors aimed at making the administrative side of their jobs simpler.  Anybody who works independently already has enough to deal with seeking out and pursuing career opportunities.  Having a service that deals with matters such as chasing payment, tax assessment and National Insurance payments can save time and, ultimately, money for busy contractors.

An umbrella company acts as an intermediary between a client and the contractor.  The most important task it carries out is that of payroll services.

Specifically, once the contractor submits a time sheet, the company bills the client on their behalf.  Depending on the umbrella company, contractors submit details of their hours manually or electronically along with any work-related expenses.

In addition to this, an umbrella company provides National Insurance and tax payments for the contractor known in the UK as PAYE (Pay As You Earn).

It is important to note that, within the PAYE system, the procedure for claiming professional expenses, known as a dispensation, is strictly monitored by the government authorities, as is the scope for reducing tax liability.

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What does it cost?

Service charges vary from company to company.  Some deduct a set fee on the gross salary that is advantageous to the contractor as it effectively reduces their tax contribution.  Others take their fee from the net pay.  A smaller number of these companies simply take a set percentage from a contractor’s earnings as their cut.

Payment schedules also differ across the board, with some umbrella companies forwarding salaries only when they receive funds from the client while others pay on a fixed date regardless.

 

It’s not just about tax

Many umbrella companies can also support contractors in financial areas that aren’t directly related to their jobs.  Advice on mortgages and pensions, even on eventually forming a Limited Company when the time is right, are stock and trade for a large number of these companies.

 

Why it’s worth it

Keeping on top of payments owed, as well as tax and National Insurance contributions, is essential to the present and future financial health of anyone who works independently.

An umbrella company can take the stress out of money matters and, at a small investment, ensure financial peace of mind.