UK Retirement Age

The UK Government has thrown another curve ball at the overburdened British taxpayer with the announcement that its plans for a progressive raising of the retirement age will be accelerated.

Implementation of the retirement age of 67 will now be brought forward from 2034 to 2026. Under the new rules, men and women born after April 5, 1961 will retire no earlier than 67. Eventually that will be raised to 68.

The State Pension Age, or SPA, is the earliest age at which a British taxpayer can draw the State Pension.

The new announcement throws younger workers planning for their retirement into uncertainty, with Liberal Democrat minister Steve Webb saying the people in their twenties or thirties should not rely on getting the State Pension at any particular age because there are likely to be more changes to the system.

With the ballooning cost of pensions as the bulging demographic of the baby boomer generation reaches retirement age, the government is keen to pull those costs under control.

Speaking to The Telegraph this week, Webb threw the blame on workers, saying that almost ten million people weren’t saving enough for their pensions. He also said that the retirement age, currently pegged at a maximum of 68, could change further and that changes would be linked to life expectancy.

Experts from accountants PwC have warned that people beginning their working life today could expect to work until they are about 72.

HM Revenue and Customs is quick to point out on its website that State Pension age is not the same thing as retirement age, generously suggesting that workers can continue to work even after reaching the age at which they can claim their pension.
However when announcing plans for raising the retirement age earlier this year, the government said that the default retirement age would be phased out and that employers would no longer be able to dismiss staff just for reaching the age of 65.

However, said Employment Relations Minister Edward Davey that employers could still force people to retire if they could not longer do their jobs.

Updates on UK Retirement Age

Age UK has long campaigned for the scrapping of compulsory retirement claiming it treated older workers as second class citizens. The organisation said that its campaign was about choice, claiming that in 2009 alone about 100,000 workers were forced to retire against their wishes. It has published research showing that nine out of ten people aged between 60 and 70 are against forced retirement.

Despite its opposition to forced retirement, Age UK is having a bet each way by opposing plans to raise the pension age, saying that there were still many people who felt they deserved to retire after a life of hard work.

Steve Webb also hedges his bets by raising the possibility that pension ages could go down again at some point, adding that it was difficult to predict what would happen in another half-century.

Over 3.5 billion’s worth of debt written off in 2011 Britain

Over 3.5 billion’s worth of debt written off in 2011 Britain. Findings show figure rests at 7% of all outstanding debt.

It has emerged from the BBC that British credit card companies wrote off a staggering 7% of all outstanding credit card debts in 2011. This is actually a decrease however from those relating to the years before; showing us both, how bad credit card debt credit card debt has been since the recession in 2008, and that the situation is to some extent, improving. So, is 2011’s decrease in credit card debt a sign of an improved economy, or merely evidence of the bank tightening their purse strings and lending to less people; as a result of the incredibly high unrecoverable debt sums of preceding years?

The actual figure rests at 3.6 billion. This, to the credit of the UK economy is a dramatic fall from 2010’s figure of £5.32 billion; the peak amount since the recession. 2009’s amount was 4.12 billion. To put all of this into context, before the banking crisis, credit card write off’s reached approximately £3 billion. Thus, 2011’s results indicate a fact a step in the right direction, and a return to the days of financial stability. To make such an assessment on a whim is a dangerous move however, with a few important factors needing to be taken into consideration beforehand.

Lending Has Decreased

The economy has recently been stale, which is no news at all. Banks have been forced to cut down on lending since the start of the recession. That lending remains so tight is indicative of the lack of trust bankers still have in the financial system. Whether this pessimism is justified is a different debate all together; however I find it hard to imagine an economy thriving under limited bank lending. Rigidness in the distribution of wealth quite simply results in a lack of market fluidity; and vice versa. This is not to say that the banks should go all out in lending, as such practices got us into this mess in the first place, however, the purse strings should be loosened somewhat in order to generate commerce. An often overlooked factor when analysing why credit card debt rates have been so high:

Credit Card Interest Rates Have Risen

Interest rates are the highest it has been in ten years, with the average sum amounting to 17.3%. Some rather unfortunate customers are even charged up to an incredible 30%. The fact that debt write offs have hit such high figures, might just in some part be down to the large increase in interest rates. Such a view, is rather simplistic, and cannot be taken as the most significant factor behind the BBC’s findings. Although, one cannot overlook high interest rates playing a part in the rise of debt sums.

Is the 2010 to 2011 decrease in debt write offs a good omen?

One would be foolish to assume, simply based on the debt figures of this year in correlation to those preceding that the economy has likewise improved. That isn’t to say the economy hasn’t gotten better to some extent, however these debt figures do not necessarily show that. It could – and I stress the word ‘could’ – all be a mirage, covered by the fact that banks have cut down significantly on lending.

How is Tax Calculated For Expats

When it comes to the world of finance, nothing seems to complicate matters more than the subject of taxation. Every country handles taxes differently, which means that if you jump from one country to another, you’re going to have to make sure that you handle your tax needs in not just your host country, but the country you left behind. That’s just the life of an expat, and you have to do what you can. There are ways to make this much easier, but at the end of the day you just have to make sure that you’ve done everything you can to cover any and all tax liability.

As you can imagine, ignoring your tax obligations can be very severe. you will end up making your life a lot harder than if you were to just focus on getting your taxes out of the way quickly.

You might even stop and wonder who uses international banking accounts, because you have to have a way to pay those taxes. Let’s go into expats and taxes.

If you are an expat living in your host country, then your taxes would be automatically taken out of your salary that you are paid while working in the country of your choosing. If you’re in the UK, this means that your UK employer will take them out. You would have to file a tax return to make sure that you have covered any refund that’s headed your way. There are also tax credits to adjust for the fact that you are paying taxes elsewhere as well. Many countries have treaties with each other in order to entice more expats to travel away from their home country. This is a good source of revenue for the host country, so don’t be surprised if you’re encouraged to stay awhile!

Taxes are something that you just can’t take lightly. if you really want to do them yourself, that’s fine, but the reality here is that you are much better off making sure that a qualified accountant or tax preparer looks over everything first.

Yes, this is an extra cost that you’re going to have to shoulder, but it’s for the best when you really think about it. It’s all about making sure that you don’t have to pay stiff penalties for getting your amount of tax owed incorrect. You also want a helping hand when it comes to wading through all of those agreements. Good luck!

101 money saving tips

Times are tough and households all over Britain are tightening their belts. Whatever income bracket you fall into, the chances are that you’ll want to cut down your costs and minimise your taxes. Here are 101 ways to do just that.

1. Take control of your budget. Decide what has to be paid and calculate how much you have to spend in the week ahead.
2. Keep a record of your spending. It helps to see where you can save.
3. Think about everything you’ve thrown away in the past year. Then ask yourself why you bought it. It’s a helpful guide for future spending.
4. Save money on insurance by shopping around for the best deals, and only pay for the level of cover you need.
5. If you’re nearing the end of a fixed-rate mortgage contract, you can save money by re-mortgaging at a better rate. Prioritise your debt. If you have multiple loans or credit cards, pay off the ones with the higher interest rates first.

6. Get rid of your current account package: you could be paying your bank as much as £300 a year for additional services you could buy much more cheaply elsewhere.
7. Shop around for credit cards. You can make significant savings by choosing the right ones and working out the best borrowing cycle on them to avoid as much interest as possible.
8. Better still; don’t use your credit cards. Using cash whenever possible will avoid interest and give you more sense of control over your spending.
9. Mortgage interest rates are usually lower than those for personal loans. So think about extending your mortgage rather than taking a new loan.
10. Keep an emergency fund, to avoid taking out loans at high interest to cover unanticipated situations.

11. Regularly review the interest you’re getting on your savings. If you can do with a different bank or building society, move your account there.
12. Go green at home. Insulating your roof and your walls could pay for itself in a year or two with the savings in winter heating.
13. Install smart electricity and gas meters. They have the potential to save you well over £100 a year.
14. Save money by moving to metered water. The meter is usually free and most companies will allow you to move back to fixed charges if your bills rise.
15. Even the smallest garden or balcony can grow a surprising amount of vegetables and you’ll be amazed how much you can save at the supermarket.
16. Consolidate your communication costs. Most providers will now sell you a package deal of television, phone and internet at a discounted price.
17. Are you paying for digital TV channels that you don’t watch? Change to a mix that only includes the channels you really want.
18. Do you still need a landline telephone? You probably use it only rarely and you can save money by cancelling it.
19. Are you using all the included minutes in your mobile phone plan? If not, you can cut costs by moving to a cheaper option.
20. Forget about telephone directory enquiries. Google is free!

21. Use rechargeable batteries. They pay for themselves in just five cycles.
22. Turn off electrical appliances, such as televisions and computers, at the wall when they’re not in use.
23. Install energy efficient light bulbs.
24. In winter, turn your heating thermostat down one degree. It could cut your heating bill by 10%.
25. Wear a sweater and turn the heating off.
26. Are your gas and electricity suppliers giving you the best prices? Shopping around could save you hundreds of pounds a year.
27. Shutters on your windows will keep the heat in during winter and save on heating.
28. Are you eligible for assistance under the Home Energy Savings Programme? This could bring you savings on power bills.
29. Get a more energy efficient boiler. You could save as much as 40% of the power you now use for heating water.
30. Another way to save money on power or gas bills is to double glaze your windows. This can cut heat loss by half.
[Read more…]

Salary Perks and Benefits in Kind. Tax Liabilities

As with many other tax rules, those on the taxing of perks, fringe benefits and benefits in kind are less than simple. The principle, however, is: if you receive non-cash benefits such as a company car or medical insurance you may have to pay tax on them in addition to the tax you already pay on salary or benefits through PAYE.

This means that if your employer provides you with a car you’ll have to pay tax on the value of it as a benefit, according to the list price of the car, its CO2 emissions and the type of fuel it uses. If you pay something towards the cost of the vehicle or do not use it for the entire year, the value may be reduced accordingly. If your employer provides you with fuel for your private use you will also have to pay tax on that.

Also subject to tax will be any loans from your employer of more than £5,000 at low or no interest. In this case the difference between the interest you pay and the interest at the official rate is a benefit.

Other benefits subject to tax are accommodation and medical insurance

There are a number of benefits in kind which on which tax is not payable. These include contributions paid by the employer into an approved pension scheme; free or subsidised meals which are provided for all employees, the use of company-owned sports facilities, redundancy counselling, some childcare arrangements, subsidised commuting costs, bicycles provided for travel to work, meal voucher up to 15p a day, removal expenses if required for transfer up to £8,000 for each move and trivial personal gifts.
Both you and your employer are required to inform the Tax Office of any benefits you receive and these must be shown on your Self Assessment form. You are required to keep the details of benefits as reported by the employer for two years after the current tax year.

HMRC includes the value of benefits with any other income on which you have not been taxed and subtracts it from the total of your allowances and other reliefs to arrive at an adjusted personal allowance, the tax-free income you are entitled to in the current year.

More on salary sacrifice benefits

Many UK companies use the savings in tax and national insurance accrued through salary sacrifice benefits to fund flexibly benefits. In such a scheme an employee relinquishes part of the salary to which they are entitled in return for some form of non-cash benefit. The most common salary sacrifice benefits include childcare and pension payments. Because these are usually taxed at the normal tax rate, this may not be an advantage for the employee. They may also result in a reduction of benefits from the state because of reduced National Insurance contributions.

Tax on benefits is calculated as follows. Suppose you are entitled to the full Personal Allowance of £7,475 and your employer has provided you with £600 worth of private medical insurance. The value of the insurance is deducted from your Personal Allowance, leaving you with a net tax-free amount of £6,875.

In most cases you will receive a PAYE Coding Notice which explains how your benefit has been processed.

How to get payday loan for your car repair?

Get Cash Fast!

So you’ve gotten yourself into an accident and you don’t have the cash in order to pay for repairs? Many people simply write this off and continue driving their cars with the damages still on them. This is not only bad for the car but it’s also not a good sign for your wallet. Damages on cars, if not taking care of quickly, will only get worse and lead to even bigger problems. This means that the amount you have to pay for damages keeps building up. However, Payday loans are here in order to get your car fixed and save you some hard earned cash in the long run.

I Don’t Have Good Credit

The beauty of a payday loan is the fact that you don’t need to have immaculate credit in order to receive one. These loans only need proof that the customer has a history of being employed and a proof of payroll records. The next time you find yourself in a car accident and you’ve got damages that you just can’t afford, try out a payday loan and see if they can help you out.

How Long Do I Have To Pay It Back?

The amount of time you have in order to pay back your loan varies from person to person. Some lenders will want the loan paid back the next time you receive your pay cheque from work. Other loan agencies will give you up to 30 days in order for you to pay back your loan that you received. This is a perfect solution to getting your car repaired back to new again if you don’t have enough cash to cover expenses.

Are Payday Loans Right For Me?

If you have damages or repairs on your car that needs to be made then payday loans are perfect for you. The only thing a customer needs to be mindful of when getting a payday loan is interest rates and penalties. There are tons of payday loan agencies and websites that can approve your loan in just few minutes. Shop around for the company that provides you the lowest interest rates at a reasonable price. Refrain from purchasing a payday loan with tons of penalty fees simply because you need money quickly. Shop around and get the best payday loan available in order to get the best of the deal in the market without upsetting your finances.

What is payment protection insurance (PPI)?

Due to numerous economic factors, the modern generation is now facing challenging financial issues. These factors are more uncontrollable and include more increasing costs of daily expenses, interest rates, and market rates than ever before. In this regard, an innovative solution, PPI or Payment Protection Insurance has rescued a big number of individuals who have overdrafts or debts.

What is PPI or Payment Protection Insurance?

Also known as loan payment protection, Payment Protection Insurance (PPI) is a kind of insurance policy that is intended to help borrowers in paying their loans in the event that they are not able to do so. This insurance policy takes care of the payments for a loan or credit card bills should the borrower becomes ill, unemployed, disabled, or dies.

Payment Protection Insurance (PPI) is a form of insurance that covers the minimum payables for a specific period of time until the borrower is able to earn money and make the payments. Usually, the policy pays the loan for 3 months, 12 months, and 2 years the most. This is especially helpful for those who want to keep a good credit standing or a positive credit rating.

Typically, this type of insurance policy comes in a form of a finance add-on. Sometimes, it acts as a stand-alone PPI policy provided by the insurance company. Either way, it covers the borrower from any instances like death, unemployment, disability and accidents that prevent them from paying a debt.

Most often than not, PPI is included in various loans, credit cards, and mortgages. One greatest benefit that PPI provides is the peace of mind amongst many borrowers who are uncertain about their repayment capabilities. There are numerous insurance providers who accommodate borrowers on a stand-alone basis, of which is more cheaper compared to the covered credit offered by various lenders and banks.

Factually, PPI’s terms and conditions can also be customised according to one’s specific needs and requirements. For a few savings, the borrower can opt for PPI coverage for sickness and accident only, without getting the unemployment protection facility. It is also recommended to check with the employer before purchasing the Payment Protection Insurance as some companies continue to pay for injured or sick employees for a specific period of time. This saves the consumer from paying extra money for an unrequired coverage.

In making PPI claims for all cases, one needs to validate the claim by providing proper documentation. It is also important to discuss different scenarios with the PPI provider to prepare for future coverage.

When You Really need a Second Eye on Your Taxes, Accountants Make the Difference!

Taxes are not a topic that everyone wants to really talk about. They probably think that if they could just ignore it, maybe those taxes will go away. Unfortunately, this just isn’t the case for taxes. In most countries, if you don’t handle your taxes on time there are stiff penalties. There can even be jail time involved if you avoid your taxes completely. This isn’t something that you really want to do at all.

Thankfully, you don’t have to choose between long nights of crunching numbers and ignoring everything and possibly going to jail. What you can do is get a good accountant to check out your tax issues.

If you’re already proficient on the tax code, you might wonder if you really do benefit from getting an accountant to look into things for you. Some people feel that they can really get through just about anything related to their taxes as long as they have the right software. This isn’t always the case, to a certain degree. You see, there does come a point where you’re going to have to make sure that you are looking at the type of situation you’re in. For someone with a more complicated tax situation, it would be a good idea to get an accountant to check things out before you submit it over to the taxing authority.

When it comes to accountants, Nixon Williams definitely stands out from the crowd. They focus on helping contractors make sense of their taxes — something that can be really tough unless you’ve been doing your own taxes for a very long time. Even veterans of the contracting world are starting to use accountants more and more because the laws change so much. Instead of having to remember all of this information, you will actually be able to get the accountant to take over for you.

The price is actually a lot less than you might expect, especially when you consider the amazing amount of expertise that you’re getting for your money.

Your taxes are too important to rest everything on “hope” — you need to make sure that you know exactly how your taxes are going to be handled. And you never know — you actually could save a lot of money on your taxes, which is always a good thing!

Tax Year Calender

The Personal Tax Year

In the UK, the government’s fiscal tax year runs from April 6 to April 5 the following year. We’ll talk about just why those dates exactly a little later, but first it’s important to note that there are a number of important dates falling within the fiscal cycle that personal tax payers should be aware of.

Here’s a calendar of significant dates in the fiscal year 2011/12

April 6, 2011 HM Revenue and Customs issue Self-Assessment Returns and notices to complete a return for the year to April 5, 2011
July 31, 2011 On this date the second payment on account for 2010/11 falls due. An additional 5% surcharge on tax remaining unpaid from the 2009/10 tax year.
October 31, 2011 Deadline for submission of returns on paper to be submitted to HMRC
November 1, 2011 A penalty of £100 is levied for paper returns submitted after this date.
December 31, 2011 Deadline for submission of online returns in the case of tax under £2,000 being collected through PAYE for the following year.
January 31, 2012 Final date for submission of online returns Final date for paper returns for taxpayers who have been unable to submit online because of HMRC’s inability to accept online returns.

Due payment date for 2010/11 liabilities

Due date for payment of first payment on account for 2011/12 (in cases where more than £1,000 is payable and more than 20% of total tax liability for 2010/11.

February 1, 2012 Interest begins on tax unpaid as at January 31, 2012Fine of £100 imposed where returns requested by HMRC for 2010/11 have not been submitted.
February 28, 2012 5% surcharge added on unpaid 2010/11 tax. Interest continues to accrue.

These are important dates for anyone with an unpaid tax liability or anyone who is required to submit a return as missing them may result in penalties.

So why does the tax year begin on April 6?

The beginning of the fiscal year originally related to the season. Before the eighteenth century, the calendar year began on the first day of spring, March 25, or Lady Day.

In 1752, Britain moved from the old Julian calendar to adopt the Gregorian calendar. At the same time, the official beginning of the year was moved to January 1.

In order to correct the lag between the Julian and Gregorian calendars, it was decreed that the day after September 4, 1752, would be September 15. This provoked riots across the country by the public, who felt they had been robbed of eleven days.

Also at odds with the new calendar was the Treasury, which complained that it would lose eleven days worth of revenue. The Treasury was also disgruntled at the idea of having the new year begin immediately after the major festive season of Christmas. Because of this, they insisted on retaining the beginning of the fiscal year on what was now April 1, where it had always been.

Go Beyond the Tax Calculators – Let an Accountant Save You Headaches and Hassles!

The more stress we have in life, the less health we have, and the more health we can have, the better our lives are in the long run. However, when you have a business and you need to figure out your taxes, it can be hard to avoid the stress that comes – especially when it comes time for tax season to start! You don’t want to find yourself waiting to the last minute, but you might not really trust that an accountant can really get you what you honestly need. The good news that you need to hear today is that there’s no reason not to hire an accountant. They’re not just for large businesses that do business all around the world — you can benefit from an accountant even as an individual. This is someone that has enough knowledge and power to truly help you turn down a different path in your finances.

If you’re looking for an accountant to get past those simple tax calculators, there are a few things that you need to keep in mind.

First and foremost, the accountant is bound by a lot of laws and ethics — they cannot manifest numbers that aren’t there. The best thing that you can do for yourself is to make sure that you are thinking about letting a professional handle this important task on your behalf. Bring all of your documentation that you can. If you are a business, then you will need to bring a lot more documentation than someone else who is working for someone else. If you have questions about what you should bring in specifically that might be out of the ordinary, you should make sure that you figure out with the accounting team in question.

Not sure where you should go first to start evaluating accounting teams? You might want to start with — they are a team of accounting professionals that can truly handle just about anything you could possibly bring to them. If you’re having problems dealing with your taxes, you need to get a professional involved immediately. The potential consequences of delaying this are too great to even think about — why deal with penalties and hassles if you can avoid it?

That’s what we thought — don’t worry about trying to figure out every last little piece of the tax code on your own. That’s what good accounting professionals are for!