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10 top tips for saving tax over the next ten weeks(05/04/2012)

Savers, families and pensioners face a race against the clock to make the most out of limited tax concessions before they vanish at the end of the current tax year on April 5. That means there are only ten weeks left from this Thursday for you to claim valuable savings allowances and protect pensions against [...]

Call for controls on investors: How private equity debt sank the Peacocks chain

MPS and employee groups have called for greater scrutiny of some of Britain’s most debt-laden firms after the collapse of High Street clothing retailer Peacocks. The chain’s administration has placed the future of more than 9,000 employees in doubt and prompted demands for greater controls over investors that saddle firms with borrowings. ‘The people who [...]

Paid too much tax? You now have two years to reclaim it

If you believe you are owed tax, then you need to get your skates on. HM Revenue & Customs is cutting the time allowed to reclaim overpaid tax by two years between now and April. Taxpayers have traditionally had almost six years to reclaim any money that has been overpaid to HMRC. But by April this [...]

Water chiefs to crack down on £1.6bn debt as 'won't pay' customers add £15 a year to bills

Bad debtors who owe water companies more than £1.6billion face curbs that could see landlords forced to hand over the names of tenants who do not pay. Environment Minister Richard Benyon will tomorrow launch a consultation on ways to crack down on debtors, who add £15 a year to the individual bills of paying customers. [...]

Olympic tickets for sale over the counter in Spain – but they have barely sold any

They’re like gold dust in Britain. But hundreds of top Olympics tickets can be bought in Spanish shops, it emerged yesterday. The country has chosen to sell its London 2012 allocation over the counter instead of through a website, where they could otherwise be bought by anyone within the EU. The decision by its National [...]

Tips for Van Insurance

Posted by admin on May 20th, 2012

How to choose value for money van insurance.

Driving a van in the UK without appropriate cover is illegal and leaves you liable for any damage caused to property and people. Specialist van insurers are able to tailor cover to meet your exact requirements so whether your van is used for domestic or business purposes, there will be a policy to suit.

The majority of van insurance providers offer different levels of cover for private, sole trader and business van usage. As with car insurance, different policy types are available, namely 3rd party, 3rd party, fire and theft and comprehensive cover.

For business users, policies are available whereby the van is insured instead of a specific person, allowing any number of authorised drivers to use the vehicle. Alternatively employees who are likely to use the van can be named on the policy; this often attracts a discount.

When obtaining quotations for van insurance, it is worth checking whether the company places any limitations on the maximum weight or engine size of vans insured or whether any restrictions are placed on usage, i.e. solely for business or solely for domestic purposes. Additionally, if you have more than 1 van, check whether an insurer offers multi-vehicle discounts.

Depending on the way in which your van is used, it may be worth opting for some of the add-ons offered by van insurance providers to ensure that you and anyone that uses your van are fully protected.

Most van insurers include cover for windscreens, tools, van fixtures, locks, keys and audio equipment as standard in a comprehensive policy, however these are usually available as add-ons to lower cover levels if required. Additionally, breakdown cover can be included as can legal expenses insurance.

If you are likely to use your van on the continent, extensions are usually available so that your level of cover whilst abroad would be equivalent to that in the UK.

By obtaining comprehensive van insurance from a specialist provider, you can be sure that you, your vehicle and even your business will be financially protected should the unexpected occur.

Tips For Horse Insurance

Posted by admin on May 20th, 2012

How to choose insurance to protect both your horse and your finances.

A horse is a big investment so it is important to choose a comprehensive level of specially tailored horse insurance to ensure that if the unexpected occurs you will not be financially disadvantaged.

The most basic levels of cover offered by most horse insurance companies are likely to include features such as third party liability (this will protect you financially should your horse cause damage to people or property) accidental damage and cover for theft, straying and death. They are likely to include only minimal cover for vet fees if any.

More comprehensive levels of horse insurance provide higher levels of cover for veterinary treatment and may also contribute towards the use of alternative practices during rehabilitation. There is, however, usually a limit on either the duration or cost of treatment relating to any one claim so you will need to make sure that you check this when you compare equine insurance.

When you compare horse insurance you’ll find that the cost of horse insurance premiums not only depends on the level of cover you choose but also on the agreed value of your horse.

Additional features such as accidental damage to saddles and tack may also be included but the inclusion of features like this may impact the cost of equine insurance so you’ll need to consider whether it’s worth paying extra for them.

Variables such as the part of the country you live in and where your horse is kept will also have an impact.

Some horse insurance companies may offer discounts if you insure more than one horse with them. If you have multiple horses, this can be a way of security cheap horse insurance cover.

By comparing horse insurance quotes and choosing a comprehensive level of horse insurance you can be sure that whether your horse falls ill, has an accident or strays, you will have the financial support in place to cope.

10 top tips for saving tax over the next ten weeks(05/04/2012)

Posted by admin on May 20th, 2012

Savers, families and pensioners face a race against the clock to make the most out of limited tax concessions before they vanish at the end of the current tax year on April 5.

That means there are only ten weeks left from this Thursday for you to claim valuable savings allowances and protect pensions against new penalties.

Financial Mail has drawn together a panel of experts and distilled their ten top recommendations for saving tax over the next ten weeks.

The panel comprised Sarah Lord, the managing director of Killik Chartered Financial Planners in Mayfair, central London; Helen Kanolik, of HelenK Financial Advice in Wimborne, Dorset; Mark Butterworth, technical manager at national adviser Skipton Financial Services; and Philippa Gee, who runs Philippa Gee Wealth Management in Church Stretton, Shropshire.

1. Shuffle your assets

Husbands and wives should consider switching assets between each other wherever possible. Aim to put income in the name of the person with the lowest income tax rate or who has some unused personal allowance – the portion of income on which you pay no tax.

Mark Butterworth says: ‘It pays to rebalance deposit accounts and other income-producing assets. ‘If one spouse is a non-taxpayer or lower-rate taxpayer, then transfer money into their name to save on total tax paid.’

2. Maximise cash Isas

Cash Isas are the starting point for tax-free saving. They are deposit accounts where all interest is paid free from tax. Savers can contribute a maximum of £5,340 this tax year, rising to £5,640 from April 6.

Advisers say it pays to put every penny you can afford into a cash Isa. Sam Hatfield, 32, is using a cash Isa to shelter an inheritance from his grandmother.

He received £12,500 last year and expects a second payment once her house is sold. Sam, who runs a Cancer Research charity shop in Burgess Hill, West Sussex, has put the money into savings accounts with Yorkshire Building Society.

This month he paid the maximum £5,340 into a cash Isa. Sam, who is single and lives in Chailey, East Sussex, says: ‘You need to make your money work for you. ‘I don’t want to take any risks investing it in the stock market or to tie up money for the long term. A cash Isa seemed to be the best option.’

3. Claim what is due

The payment of tax credits – Government help for working couples and families – depends on your income each tax year. It is worth telling Revenue & Customs promptly if that income changes.

The value of the credits can rise if your income has gone down if, for example, your working hours have been cut or you have been made redundant. Philippa Gee says: ‘There is no need to wait for the end of the tax year or to be sent a renewal form. ‘It is one of the rare occasions where it is worth getting in touch quickly.’

Gee also says it is worth reporting any increase in income. Rises of less than £10,000 will not affect your credits in the current tax year. But prompt notification makes any overpayment of credits next tax year less likely. The tax credits helpline is 0345 300 3900.

4. Equity Isas

For those willing to take on more risk, stocks and shares Isas are the next logical step. These can be used to shelter funds investing in shares, bonds and property. There is no further income tax to pay on any dividends or payments from funds held in an Isa.

And any profits when the investments are eventually sold are free from capital gains tax. The maximum that can be saved into a stocks and shares Isa is £10,680 this tax year, rising to £11,280 from April 6.

These allowances are reduced by anything that is already saved into a cash Isa. Jonathan Chilton has got into the habit of paying as much as he can afford into an equity Isa.

Jonathan, 30, who works in marketing for a legal publisher, saves each month into a series of investment funds through online broker Fidelity FundsNetwork. ‘As you get older, you start thinking more about the future and saving becomes important and I’ve tried to do what I can each year,’ he says.

His payments are invested in four different funds – Invesco Perpetual’s Global Smaller Companies and High Income funds, M&G Global Basics and Fidelity South East Asia. Jonathan lives in West Hampstead, north-west London, with girlfriend Nicola Benford.

In his spare time, Jonathan plays and is a coach for the London Blitz American football team. He says: ‘As my career has progressed, the tax-efficiency of the Isa has become more important.’

5. Redundancy?

It is a depressing sign of these tough economic times that dealing with the financial implications of a redundancy makes it into this year’s tax top ten. The first £30,000 of any redundancy settlement is tax-free, but the rest is taxed as income.

And if you lose your job towards the end of the tax year, a redundancy lump sum on top of salary already earned could trigger a big tax bill.

Helen Kanolik says: ‘If you are a higher-rate taxpayer, or the redundancy payment pushes you into a higher tax band, see if you can get the payoff deal structured so that part of the payment is deferred into the next tax year.’

Gee says: ‘Depending on your age and future work plans, it may also be beneficial to have a portion of any redundancy paid into your pension.’ This could be the works pension or a private pension.

6. Lock in gains

Capital gains tax is charged when you sell assets, including shares and property, for a profit. It is levied at 18 per cent for basicrate taxpayers, rising to 28 per cent if you pay income tax at 40 or 50 per cent.

Fortunately, an annual allowance means the first £10,600 of any profits is free of tax. Sarah Lord says: ‘The CGT exemption is one of the things people forget or fail to use fully.’

But those who hold substantial portfolios outside an Isa, for example as a result of funds recently inherited, should think about selling a portion every tax year to bank profits and use up the CGT allowance.

Another strategy is to invest in growth funds that pay no income. Then you can sell a small slice each year, using the CGT allowance to take the equivalent of tax-free income.

7. Boost the pension

Have you done all you can to bolster pension savings? Contributions into a pension qualify for tax relief. This boosts the value of every £1 of taxed income that you pay in by 25p for basic-rate taxpayers.

Higher rate taxpayers can claim back even more. There is a £50,000 annual limit for pension contributions, though you need to have earned at least this sum during the year.

However, big earners, or perhaps those who have been made redundant, may be able to invest more.

You can now carry forward any unused allowances from the three previous tax years. Kanolik says: ‘If you are self-employed or running your own business, check to see whether it is worthwhile drawing some cash from the business before the yearend as pension contributions.’

With rumours swirling that tax relief could be tageted in March’s Budget, advisers recommend topping up pensions sooner rather than later.

8. Children

This is the first tax season when the whole family can top up their Isas. The Junior Isa, launched in November, allows family or friends to save up to £3,600 each tax year into a tax-free account on behalf of children.

Like the adult Isa, the ‘Jisa’ can be held in cash or invested in stocks and shares. The account is open to anyone aged 17 or under who does not already have a Child Trust Fund (CTF).

But once paid in, cash cannot be withdrawn until the child turns 18. And those with a CTF – effectively anyone born between September 2002 and January 2 last year – also benefit from higher contributions this year. The CTF rules have been revised t o increase the maximum payment to £3,600.

Helping hand: Graham and Marion Flack make use of the annual gifting rules to help their son and grandchildren

9. Inheritance tax

The first £325,000 of any legacy is tax-free. Beyond this, IHT can be levied at 40 per cent, taking a large bite out of a lifetime’s work. However, making annual gifts to family or friends can reduce the potential for an IHT bill. Each person can give up to £3,000 per tax year, plus as many gifts as they like worth up to £250 to different individuals.

None of these will affect the £325,000 nil-rate band. You can still give away bigger sums, however if you die within seven years of making these gifts they can reduce the nil-rate band. Graham Flack, 74, and his wife, Marion, 78, use the gifting rules to pass down money to help their son, Andrew, and his children.

The couple, from Yelvertoft, Northamptonshire, capitalise on the annual allowances to pay, between them, £300 a month to Andrew, 47, their only child. They take advice from Skipton Financial Services.

Graham, who served with the RAF Regiment before working as a development manager with British Aerospace in Saudi Arabia, says: ‘We want to run down our resources in a modest sort of way. It is about striking the right balance so that we have enough for our needs too.’

Marion has Parkinson’s Disease and Graham wants to ensure that they can cover any of her future care needs.

10. Protect savings

Those who already have big pension funds, or have earned the right to a big final salary pension, may need to act to protect themselves from future taxation. The Government is reducing the pension lifetime allowance on April 6 from £1.8million to £1.5million.

Final salary pensions are valued at the rate of 20 times annual income. This means that someone who is already entitled to a pension of £75,000 a year or more could hit the new barrier.

Pensions are tested at retirement. Anything over this limit will be taxed at 55 per cent, but anyone who thinks they might break through the new allowance can protect their fund if they register with the Revenue before the end of the current tax year.

Lord says: ‘There is no flexibility on deadlines and it may well affect more people than the Government has realised. ‘We’ve recently seen three long-serving police officers who all need to register.’

What You Must to Know Before You Buy Critical Illness Cover

Posted by admin on May 19th, 2012

Critical Illness Cover can give you the peace of mind that if you unexpectedly fall ill, you will receive a payout to help you cope financially. We share our advice for how to go about finding the right critical illness policy for your needs.

Who is it suitable for?

Critical Illness Cover is by no means an essential type of insurance and there will be no obligation to buy it at any point in your life, though you might be sold it alongside products that represent a significant financial commitment, such as your mortgage.

However, although not essential it can provide real peace of mind that you will receive some welcome help should you ever fall seriously ill, giving you one less thing to worry about. Financial responsibilities are likely to be the last thing on your mind if you do become unwell, so having this kind of cover in place can provide valuable reassurance that you’ll be able to cope.

That said, you do need to be careful when choosing a policy, as critical illness cover is notorious for coming with lots of exclusions and very specific conditions under which you can make a claim. For example, though heart attacks, cancer and strokes are covered by nearly all critical illness policies, some minor heart attacks or early stages of cancer will not be covered. Checking the small print of any policy is therefore vital, as you may find upon making a claim that your insurer is not prepared to pay out due to a very specific exclusion.

Some critical illness policies will not cover illnesses brought about by pre-existing medical conditions, so this is important to look into too. It is also crucial to provide your insurer with as much detail as possible about any medical conditions you have or have had upon taking out a policy, as if you are found to have omitted any detail regarding your health, this could invalidate your cover when you need to make a claim. This includes any conditions that members of your family have or have had in the past, because these could possibly have an influence on your own health too.

When it comes to taking out insurance, it is always better to disclose all than leave things out. Although you might be given a higher premium, it’s worth paying more to know you will be covered if the time comes to make a claim.

If you are a single person with no dependants, critical illness cover could be more valuable to you than life insurance, because it will pay out a lump sum if you become ill rather than paying out to those who rely on your income to survive. It would be worth considering how your family would cope if you became ill and were unable to work, and whether or not they would have the means to care for you.

What is Critical Illness Cover?

Critical Illness Cover is a type of health insurance that pays out a tax-free lump sum if you are diagnosed with an illness that is deemed to be life-threatening under the terms of your policy.

The number and variety of conditions covered differs widely from insurer to insurer, but there are seven core conditions that tend to be covered by all critical illness policies. These are cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke. Permanent disability caused by illness or injury is also usually covered by most policies.

This means that if you have critical illness cover in place and are diagnosed with one of these conditions, you will receive a payout from your insurer, usually amounting to several hundreds of thousands of pounds, to spend as you wish during what is likely to be a difficult time.

Critical illness cover differs from Income Protection Insurance and other forms of insurance that protect your income, as you will not receive a regular pay-out to replace any loss of income. Instead you will usually get a one-off tax-free payment which could be used to help with living costs, mortgage repayments and so on – but could equally go towards paying for treatment or care that might be needed.

How much does critical illness cover cost?

Naturally the cost of your critical illness cover will vary from insurer to insurer, and according to what kind of cover you require. However the cost of premiums will principally hinge on how ‘high-risk’ a customer you appear to be. This means how likely your insurer sees you as becoming critically ill during the policy term.

Therefore if you have many pre-existing medical conditions, a history of illness, or members of your family suffer from any serious illnesses you are likely to pay more in premiums than if you have a clean bill of health. Also if you are a smoker you can expect to pay more in premiums than non-smokers, as so many health risks are associated with smoking.

The cost of premiums may also be affected by your selected waiting period. Generally there will be a period of 3 months or so as standard after taking out a policy during which you can’t make a claim. After that point, upon making a claim, you’ll usually have to wait for around 30 days before your receive your payout, though if you want this wait period to be shorter you will pay more in premiums.

If your illness is a permanent disability rather than a debilitating illness that severely shortens your life expectancy, you may have to wait 6 months to a year after making a claim for your insurer to settle it.

What should I look for in a critical illness policy?

It’s advisable not just to go for the cheapest plan, as this may not provide you with the cover you need. That said it is important to find a policy that suits your means, as long as you balance this with cover that will be useful to you in the event of illness. Likewise if you’re on a limited budget it’s not always necessary to go for a policy that covers every condition under the sun, as these may well cost more and a more basic policy may be adequate to give you the cover and reassurance you need.

As with all financial products it’s a good idea to shop around before you decide on a policy, so that you can compare the benefits, costs, allowances, and restrictions of several different policies until you find one that suits you. Remember to always look beyond the policy summary and find out what the policy will really cover in the event you need to make a claim.

The sorts of exclusions that are associated with critical illness cover are largely due to new agreements made by the ABI (Association of British Insurers) in 2003, which saw a tightening of the restrictions on many critical illness insurance policies. This means that less severe cases of an illness are now less likely to be covered. Such exclusions may increase in the coming years as medical technology advances, and premiums may rise as a result, so if you are considering getting critical illness cover it may be better to do so sooner rather than later.

It’s worthwhile checking the small print of your critical illness policy to see if your premiums are fixed. Fixed premiums means that the amount you pay to keep up the cost of cover will stay the same throughout the life of your policy. This means that you can budget accordingly and won’t face premium rises. Unfortunately many critical illness policies do not have fixed premiums and they are likely to rise at some point.

Many critical illness policies now offer cover for children as part of their insurance, meaning that should your children fall critically ill they will be covered under your policy, and you’ll receive a lump sum payout. It may give you peace of mind to know that both you and your children will be financially covered should the worst happen.

What else should I consider?

When you have decided to buy a critical illness insurance policy you’ll have to fill out a detailed form specifying any medical conditions you have or have had in the past, plus any medical conditions in your family. If in doubt about which conditions to include, it’s better to include all of them because one condition may, according to the insurer’s statistics, make you more likely to suffer from another condition later in life.

Some insurers, although by no means all, will also require you to undergo a medical examination before being offered a quote for cover.

Finally, when you have taken out your policy there will usually be a ‘cooling off period’ of around 30 days, during which time you may cancel your policy and get a full refund if you change your mind.

Call for controls on investors: How private equity debt sank the Peacocks chain

Posted by admin on May 19th, 2012

Tough times: MPS and employee groups have called for greater scrutiny of some of Britain's most debt-laden firms after the collapse of High Street clothing retailer Peacocks

MPS and employee groups have called for greater scrutiny of some of Britain’s most debt-laden firms after the collapse of High Street clothing retailer Peacocks.

The chain’s administration has placed the future of more than 9,000 employees in doubt and prompted demands for greater controls over investors that saddle firms with borrowings.

‘The people who have been made redundant are not in a good way,’ said Cardiff Central MP Jenny Willott, who has hundreds of Peacocks employees living in her constituency.

Willott said the short-term financial structure of private equity ownership had made the Peacocks busuness unsustainable and the company’s staff were ultimately paying the price.

‘This company was making an operating profit but when you add in the interest repayments on the debt, which were absolutely massive, it made a loss,’ she said.

‘The structure is set up to make a short-term profit, not for the long term. But no one is asking, if the economy takes a downward turn, will they be able to cope?’

Willott added that the situation at Peacocks was similar to that of care homes provider Southern Cross six months ago.

Private equity firms typically borrow money to buy firms. But the liability for these borrowings is placed on the books of the company being bought – crucially not on their own accounts.

They have frequently taken hundreds of millions of pounds in dividends out of the firm or demanded regular interest repayments. Private equity owners usually plan to own a firm for no longer than five years and then sell it at a profit.

Adrian Bailey, chairman of the Business Select Committee and MP for West Bromwich West, said unsustainable levels of debt were unacceptable.

‘We need to look at a regulatory regime and issues about company takeovers and we do need legislation to reinforce long-term investment and to limit short-term speculation. The tax system is one way of doing that,’ he said.

‘If you could frame tax regimes around promoting long-term investment in these companies then that would be a very useful way of doing this,’ he said.

Calculations for private equity purchases are usually made on growth supported by a buoyant economy, not a prolonged downturn. They also mean private equity- owned companies can pay less tax to the Government.

According to accounts filed by Peacocks, holding company Henson No.1 received a £338,000 corporation tax credit over four years to 2010.

The most recent accounts show sales in the year to April 2010 were £720 million against losses of £56.6 million and net debt was £578 million, meaning annual finance and interest rate charges of £84 million.

Turnaround firm Hilco was among suitors for Peacocks this weekend and Sun Capital was expected to secure a deal to buy sister chain Bonmarche. But perhaps more concerning are the alarm bells raised around Britain’s care home providers.

Southern Cross last year collapsed amid accusations that its private equity owner Blackstone, based in New York and the world’s fifth largest, had sold care homes at a profit and leased them back.

Southern collapsed, leaving care for its 30,000 residents in doubt, when it failed to pay its rent to landlords.

Rival care homes provider Four Seasons is working to restructure its £785 million debt before a September deadline this year.

In an effort to monitor the performance of care home provider Four Seasons, the GMB union has demanded it make public the financial accounts from its Guernsey-based parent company.

‘Private equity firms raise huge amounts of debt against assets and by the time problems arise the villains of the piece have all too often disappeared,’ said Justin Bowden, national officer at the GMB.

A spokesman for Four Seasons said it was working with advisers to restructure the debt and that it planned to release its Guernsey accounts ‘in the next couple of weeks.’

Cash ISA Tips For Beginner

Posted by admin on May 19th, 2012

If you want to keep all the interest from your savings then a Cash ISA is the account for you, here’s a beginner’s guide to help you choose the best tax free home for your money.

Getting the best return on your savings is not only satisfying but also makes financial sense. Making sure you protect your savings from the taxman is a great start and an ISA does just that.

Here’s everything you need to know about Cash ISAs and how exactly you can pick the best one for your circumstances.

What is a Cash ISA?

A Cash ISA is a savings account like any other but with one major difference.

Unlike ordinary savings accounts you don’t pay tax on the interest you earn.

If you’re a tax payer with money in a standard savings account you will have income tax deducted from the total interest you earn before it’s credited to your account. This ‘net’ rate of interest will be less than the advertised AER rate.

However money in a Cash ISA (Individual Savings Account) is protected from income tax so you receive the full AER/gross interest rate advertised, without having tax deducted.

Who can have one?

ISAs cannot be held in joint names or on behalf of anyone else as they are individual savings allowances.

However, anyone over the age of 16 who is resident in the UK can open a Cash ISA. Crown Employees such as soldiers and diplomats who live overseas and their families are also eligible.

A new Junior ISA scheme was launched in November 2011 following the Coalition government’s Spending Review.

However, Junior ISAs are significantly different from standard Cash ISAs and are designed as a replacement of the outgoing Child Trust Funds – for more information read our guide Junior ISA Regulations FAQs.

Cash ISA lmiits

You can only pay into one Cash ISA each financial year (6th April – 5th April) due to the tax benefits you receive.

There is also a limit to how much you can save in a Cash ISA in each financial year: For the 2011/12 tax year the limit is set at £5,340.

This actually only represents half of your tax free savings allowance, in total you can save up to £10,680 in an ISA, but the rest must be through an Investment ISA.

Read our Beginner’s guide to Investment ISAs for more information.

Can you access your money?

You will often be able to secure a better interest rate if you lock your money away in a Cash ISA for a fixed period or choose an account that requires a certain notice period for you to access your money.

Fixed rate Cash ISAs can guarantee the rate of interest you’ll earn for up to 5 years, however there are a couple of things to consider before tying your money up.

Firstly, it’s unlikely that you’ll be allowed to draw on your money during the fixed rate term. Some accounts don’t allow any access, while others are likely to penalise you for the privilege. As such you should only opt for a fixed rate Cash ISA if you are confident you won’t need to draw on your savings. Similarly, if you do decide to fix, you should consider how long you can afford to leave your money untouched.

Secondly you need to consider how interest rates are likely to perform during any fixed rate period. This is particularly the case if you lock in to a long term fixed rate Cash ISA account.

While the initial rate may look attractive compared to an instant access account, if savings rates climb during your fixed term period you could end up losing out. Of course, the same also applies – if interest rates fall, the rate paid on your savings will seem favourable.

If you decide that you may need to get hold of your money at short notice, an instant access Cash ISA is likely to be the best choice.

The vast majority allow you to withdraw your cash without notice or penalty. There are, however, a few instant access savings accounts that apply limits to your access so you need to check the terms and conditions. You can use our Instant Access Cash ISA comparison table to find out what’s on offer and compare features and benefits.

How much do you have to save?

The way you save is also likely to have an influence on which account is the best choice.

If you have a lump sum that you need to deposit immediately your needs will vary from someone who wants to save £50 a month.

If you want more flexibility then an instant access Cash ISA will allow you to pay in up to your annual £5,340 ISA limit as and when you like. You will also be able to withdraw your money when you need it without having to worry about losing interest or having to give notice.

Fixed rate ISAs are often targeted at savers who can deposit a lum sum and leave it untouched for a fixed period. They will tend to guarantee a rate of interest for a set number of years.

Some Cash ISAs, usually dubbed Regular Saver ISAs, are specifically targeted at people who want to save on a monthly basis. However remember that even though the rate may look more attractive than some standard accounts, you won’t have a full balance earning interest until the final month.

How much interest can you earn?

The main factor which will decide how much your money makes is the interest rate you are offered and as a rule the higher the rate the better.

Once you’ve decided how you want to save in a Cash ISA, and whether you would prefer a fixed rate or instant access account, you should try and find the Cash ISA that offers the highest interest rate possible on the amount you want to save.

You may also want to compare the rates offered by standard savings accounts to the Cash ISAs, however remember to use the net rate from the standard accounts to include the tax you’d pay.

If you’re a basic tax payer you’ll get 20% less, 40% less if you’re a higher rate tax payer and 50% if you fall into the top rate tax bracket.

Can you transfer balances from old ISAs?

If you have Cash ISAs from previous year’s it makes sense to check the rate of interest you are earning on them.

Some Cash ISAs will guarantee an attractive rate for a fixed period (often 12 months from account opening) and will then automatically switch to a much lower interest rate.

Others entice savers in with an introductory bonus but can fluctuate from the very first month.

It makes sense to make a note of when your interest bonuses end and check your interest rates on a regular basis to make sure you’re not missing out.

If you find that you are earning a poor interest rate on your Cash ISA then look for a new account that accepts ISA transfers.

Don’t simply withdraw the cash, instead you should contact your bank to arrange an ISA transfer, this way you can move your ISA savings without losing your tax free protection.

Unfortunately under current rules you cannot transfer money held in an Investment ISA into a Cash ISA, although you can transfer balances held in Cash ISAs into Investment ISAs.

Do I have any other options?

If you are left feeling uninspired by the interest rates on offer from the Cash ISAs on the market then you may want to consider looking into an Investment ISA.

Your Cash ISA allowance only represents half of your annual entitlement, the rest can be invested in stocks and shares through an Investment ISA.

Try following our Action Plan How to start investing in shares for more help.

Are you better off using your money elsewhere?

Although saving up for a rainy day, or simply trying to get a good return on your money is a good idea, there are occasions where your money could be put to better use elsewhere.

If you have any outstanding debts then it’s likely that what you’re charged in interest would far out-weigh the money you’d earn in even the highest rate ISA.

For example an outstanding balance of £1,000 on a low interest credit card with an APR of 16.9% would cost you approx £169 in interest charges, while the same balance in a generous 5% ISA would only earn £50 – less than a third – over the course of a year.

Therefore clearing any debts before saving into a Cash ISA, or any type of savings account, is likely to save you money in the long run.

Premium Bonds – A Worthwhile Investment Or Not

Posted by admin on May 19th, 2012

Find out exactly what premium bonds are and whether they’re worth investing in.

What is a premium bond?

A premium bond is effectively a savings account from NS&I (National Savings and Investments), into which you can deposit between £100 and £30,000.

What makes premium bonds different to standard savings accounts is that instead of earning interest on your invested money, you enter a monthly prize draw, with the chance of winning between £25 and £1million.

The chance of winning a £1million jackpot has made premium bonds hugely popular with UK savers, ever since they were first introduced in 1956. But just how likely you are to win big with these bonds, or indeed win anything at all, is worth questioning.

How do they work?

If you open a premium bond account you are able to invest between £100 and £30,000. In return you’ll receive the equivalent amount in bonds. For example, if you invest £100, you would receive 100 £1 bonds.

You can buy bonds online from the NS&I, over the phone, at the Post Office, or with a regular monthly payment by standing order. Anyone over the age of 16 can buy them, or they can be purchased by parents or grandparents for those aged under 16.

The bonds each come with a unique number and are put into a prize draw a month after you’ve bought them. They will be re-entered in each subsequent draw until you decide to cash them in.

What are the benefits of investing in a premium bond?

In times of banking instability, you may be comforted to know that investing your money in a premium bond ensures that your money (up to the £30,000 maximum investment) is completely safe. This is because NS&I is backed by HM Treasury. Also, your capital itself is not gambled in the prize draw – only the interest that you might have earned on that capital.

Another thing worth noting is that there is no minimum length of time that you must hold the bonds. You can cash them in any time you like from the time you invest, although new bonds can’t be cashed in for a month after they are first purchased. Also, it will take up to 8 days to withdraw the money after you have decided to cash in.

If you do win a draw, any prize money (from £25 to £1million) will benefit from tax-free status. You may opt to re-enter your winnings into the draw in the hope of winning even more, an idea which is supposed to imitate the compound interest you would get on a standard savings account (the interest earned upon interest over a year).

What’s the catch?

Unfortunately, the many catches of investing in a premium bond arguably outweigh the benefits. Firstly, it’s worth considering exactly how likely you are to win in the monthly prize draws.

Of an average 40 billion bonds entered in the prize draw each month, the prize ratio works as follows:

Around 1 million bonds are awarded £25 prizes
Around 20,000 bonds are awarded £50 or £100 prizes
Around 2,700 bonds are awarded £500 to £1million prizes
1 bond is awarded a £1million prize

This means that your chances of winning the top £1million prize are about 40 billion to 1, odds that make a jackpot win at the National Lottery seem a sure bet in comparison (around 14 million to 1).

Another thing that should be taken into account is that although your invested capital is safe in a premium bond, inflation means the value of that money will go down over time – and with no interest earned to offset that loss of value you’ll effectively end up with less than you started with.

The NS&I refer to any payouts as ‘wins’, the lure of which can be very attractive to those wanting to earn some money back on what they invest. However you are likely to win less than the interest earned on a standard savings account, which would be around 2-4%, so you may be much better off investing your money in a top savings account or tax-free ISA instead.

These will enable you to earn money on what you invest and will pay you a better return than the average you will get back from premium bond wins. You could even think of the interest paid on your savings as a ‘win’ in itself – and one that is guaranteed to be paid out to you on a regular basis.

The premium bonds are described on the NS&I site as ‘an investment which offers the fun and excitement of a chance of a big win.’ However you should remember that premium bonds are government-backed products that help to generate government funds, so it is understandable the NS&I would want to sell them to the public in this way.

In general, premium bonds aren’t really worth considering in terms of a realistic return on your money. Although there is a chance that you could win big, this chance is negligible at best.

If you are a higher-rate taxpayer and have already used up your tax-free ISA allowance, perhaps these bonds could suit you – if the chance to win prize money is more important to you than earning a guaranteed return on your money. But for the majority of savers who want or need to earn interest, a top-paying savings account is likely to be a better option to take.

In this way, premium bonds should be seen not as a viable savings account or investment, but as a way to forego earning interest in favour of gambling that interest on the chance of winning money.

Tips For You To Gift Money Without Being Taxed

Posted by admin on May 19th, 2012

“It’s my money and I can do what I like with it, right?” Wrong. There are a set of rules governing the ‘gifting’ of money – how much you give, how often and to whom determines whether the gift will be liable for tax. Here is what you need to know.

Why are there tax implications to giving money away?

In a nutshell, to prevent people from avoiding inheritance tax by giving all their money away before they die. This doesn’t mean you can’t make a gift of money at all, but the tax system is designed to ensure that you are not able to give away large sums of money (either in one go, or through smaller, regular gifts) without paying tax.

What is inheritance tax?

Inheritance tax is paid on someone’s estate (i.e. money they had in the bank, property they owned etc) when they die. Inheritance tax is only payable on any portion of that estate that is above a threshold of £325,000, and is charged at 40%.

Who pays inheritance tax?

In effect, the estate of the deceased pays the tax. In other words, inheritance tax is assessed and paid out of the whole estate, with the beneficiaries of any Will getting their share of the estate after tax.

So, are gifts of money always liable for inheritance tax?

No, there are a number of exceptions that enable gifts of money to be given, without tax being liable. Those exceptions break down according to who the money is given to, why it is given, the total amount you give away each year and how long you live after giving money away as a gift. They break down as follows:

1. Gifts to ‘exempt beneficiaries’:

You can give as much money as you like to certain people and organisations without paying Inheritance Tax (this applies whether you give money whilst living or after you death, via your will). Exempt beneficiaries include:

Your husband, wife or civil partner, provided they live permanently in the UK
Charities registered in the UK – to check which charities qualify, visit www.hmrc.gov.uk
Some national organisations like universities, museums and the National Trust

NOTE that gifts to unmarried partners or unregistered civil partners are not exempt from Inheritance Tax.

2. Your Annual Exemption:

You are allowed to give away a total of £3,000 each year, without any tax implications after your death.

Bear in mind that this is the total annual amount that you can give away, NOT a total amount you can give to each beneficiary, each year.

It is also worth noting that your Annual Exemption can be carried forward for one year if it has not been used. In other words, if you did not make any gifts of money during last year, you can give away a total of £6,000 this year. Equally, if you gave away £1,500 last year, you’ll be able to give away a total of £4,500 this year.

The Annual Exemption cannot be carried forward by more than one year.

3. Giving small cash gifts:

In addition to the exemptions above, you can give away small gifts – not more than £250 – to as many people as you like in one tax year.

However, some points to remember include:

You can’t make a gift of more than £250, and claim exemption on the first £250 – larger gifts are treated differently
You can’t combine the small gifts exemption with another exemption when giving money to one person. In other words, you can’t give one person £3,250 and claim exemption based on a combination of the small gifts and ‘Annual’ exemption

4. Wedding gifts:

Provided that you give or promise to give a cash gift on or shortly before the ceremony you can make quite large cash gifts as wedding or civil partnership presents, without being liable for Inheritance Tax. The limits on such gifts depend on your relationship with the recipient:

If you are a parent you can give up to £5,000 tax free
Grandparents can give up to £2,500
Anyone else can give up to £1,000

Remember however that, if the wedding or civil partnership is called off and you still give the gift, it will NOT be exempt from Inheritance Tax.

5. Regular gifts or payments:

Any gifts that are part of your normal expenditure, are exempt – provided they are made from your after tax income (not your savings) and that you have enough money left over to maintain your lifestyle. These exempt payments include:

Maintenance for your husband, wife, civil partner
Maintenance for your ex-husband, ex-wife or former civil partner
Maintenance for relatives who depend on you
Maintenance for your children, adopted children or step-children, as long as they are under 18 or in full-time education
Monthly or regular payments to anyone
Regular gifts for Christmas, birthdays or wedding/civil partnership anniversaries
Premiums on life insurance policies

Does it make any difference when I give money as a gift?

Yes, though this rule really only makes a practical difference for the elderly and people who are terminally or seriously ill. That is, any gift given more than seven years before your death is automatically exempt from Inheritance Tax. In addition, any gift given between three and seven years before your death will be liable for Inheritance Tax at a reduced rate – this is known as ‘Taper Relief’.

How is inheritance tax paid on gifts given less than seven years before the death of the ‘giver’?

This depends on the value of the gift, and there are two possible scenarios:

If the gift is worth less than the Inheritance Tax threshold (£325,000), then the value of the gift will be added to the deceased’s estate, with any tax paid by the estate prior to any inheritances being paid out
If the gift is worth more than the Inheritance Tax threshold, then the recipient (or a representative of the deceased’s estate) will have to pay Inheritance Tax on the total value of the gift.

Remember that these rules only apply to gifts not covered by the exemptions already described above.

Finding Cheap European Breakdown Cover Tips

Posted by admin on May 19th, 2012

Find out what you need to look for when you compare European breakdown cover deals so you can pick a European breakdown insurance policy that protects you when you’re travelling on the continent.

Whether you are travelling abroad for business or leisure, European breakdown cover is invaluable if you have car trouble while you’re away.

However, the level of cover offered by different Euro breakdown cover policies and providers varies greatly so it is important to make sure you choose a breakdown cover Europe policy that is adequate for your travel plans.

Even the most basic European car breakdown cover is likely to provide you with access to a 24 hour English speaking helpline. This in itself can be incredibly helpful and reassuring, especially if you do not speak the language of the country you are travelling in.

When you place a call to your provider’s helpline, operatives will determine your location and arrange for a qualified local mechanic or partner breakdown service to come to your assistance.

The mechanic sent will attempt to repair your car at the roadside and if unable to do this, will tow you to a nearby garage where more extensive work can be carried out.

It is important to bear in mind that most European car breakdown insurance policies place a limit on the cost of labour covered, so if more extensive work is necessary you are likely to have to contribute to the cost.

Policies will also differ in the way they cover additional parts; although most will cover the cost of parts being located and sent from the UK if they are unavailable locally, the majority will not actually contribute to the purchase of the parts themselves.

If the mechanic or garage deems your car irreparable, most European breakdown service providers will cover the cost of your car and its passengers to be repatriated.

More comprehensive levels of cover will also pay out for emergency accommodation and alternative travel arrangements for the remaining duration of your trip. However, it is important to be aware that some European car breakdown insurance policies will not pay out for repatriation of a vehicle if the cost of transportation to the UK is greater than the value of the car itself, so always check the small print.

Most providers offer European breakdown cover single trip policies which will cover your car on the continent for a specified number of days. For this reason you must always remember to notify your provider if you intend to extend your trip. More comprehensive levels of single trip European breakdown cover will also cover your car for a set period prior to your departure date and supply a hire car if yours is unfit.

For frequent European travellers, annual breakdown cover is also available and can be an economical choice if you are likely to made several trips to Europe during a year.

Some comprehensive UK breakdown policies include European assistance and although more expensive, this can be an economical option if you require a higher level of regular cover. However, check the details as some only offer ‘weekend break’ cover for locations in Western Europe within a specified distance of a recognised port.

Policies vary between providers and most offer several levels of cover with additional options such as caravan, trailer and tent cover, emergency accommodation and onward travel and the cost of an additional driver if the named driver falls ill.

Policies also vary as to whether they cover a specified driver or a specified vehicle. The vehicle option is often cheaper, and it can work out to be the more flexible and economical choice if more than one individual is likely to be using the car whilst abroad.

It is also important to check whether the provider covers accidents as well as breakdowns.

Whilst driving abroad it is vital that you carry your passport, driving licence (both photocard and paper counterparts), insurance and European Breakdown cover documents with you at all times in case of car trouble.

It is also important to remember that the mechanic sent is unlikely to speak English and that providers are unlikely to be able to guarantee a response time unlike in the UK; if you are having difficulties, the providers helpline should be your reference point.

By matching the level of European breakdown cover to your travel requirements, you should be able to enjoy your trip with the peace of mind that should anything go wrong with your car, you will have quality assistance in place.

Tips For Investment Trusts

Posted by admin on May 19th, 2012

While the world of investments may seem like a murky place, shrouded in a blanket of financial terminology, placing your money in an investment trust could see your money grow at a rate that outpaces any savings account. Here’s what you need to know.

If you want your money to work as hard as possible then an Investment Trust could be a good choice.

Less well known than unit trust and OEICs, investment trusts give you greater freedom to pursue a profit on the stock market.

However, fail to choose the right trust and your money could be lost just as quickly.

Here’s what you need to know about investments trusts and how to go about picking the best one for your investment needs.

What is an Investment Trust?

An investment trust is a type of grouped investment which allows you to pool your money with other investors and buy shares across a variety of different companies.

Unlike other types of grouped investments, such as unit trusts & OEICs, an investment trust is a closed ended investment that issues a fixed number of shares.

This can mean that shares for popular investment trusts may not always be available to buy as the full allocation may be held by existing investors.

An investment trust is also a listed company in its own right and trades on the value of its own shares on the London stock exchange.

A board of directors is employed by each investment trust to look after the interests of the shareholders – those who have invested in the trust – and to decide who is responsible for managing the fund.

Why choose an investment trust?

Pooled investment

By investing with thousands of other people in a pooled investment your money can be spread more efficiently across a wide number of companies.

In essence, putting your money into large fund enables you to spread your investment across a range of companies and sectors that would simply not be possible if your managed your investments alone.

Investing in this way should also reduce your overall investment risk – if one of the companies the fund had invested in did drop in value significantly, the overall impact would be cushioned by the other investments.

Professional management

When you invest in an investment trust you are choosing a group of financial experts to invest your money on your behalf.

Unless you are an experienced investor, or have a good knowledge of the financial markets then, in theory, their expertise should help make your investments more profitable – of course there are no guarantees that this will be the case!

Tax Benefits

Investing through an investment trust can have several tax benefits.

Firstly this type of investment can be placed within an ISA wrapper, meaning that you don’t have to pay capital gains tax on your profits. If you are a higher rate tax payer this could save you 40% of your profits and make a big difference to your net returns.

Another benefit of investing through an investment trust is that you avoid capital gains tax when the trust sells individual company shares, regardless of whether your investment is protected by an ISA. This is because you don’t directly own the shares yourself, but instead own shares in the investment trust as it is classed as a listed company so you’re not liable.

When you consider that an investment trust will hold shares with hundreds of different companies and will buy and sell shares on a daily basis this exemption constitutes a significant saving.

What’s the risk?

As with all investments there is a certain amount of risk to your capital, as the value of shares purchased on your behalf by an investment trusts can go up as well as down.

However, these risks can be managed to a certain extent, through the type of investment trust you choose to invest in.

Yet there are some other factors which may increase the risk you face when investing in an investment trust.

Supply & demand

As well as being an investment vehicle, an investment trust is a company in its own right and its shares are floated on the stock market. Consequently the price of its shares can be influenced by supply and demand and not truly reflect the actual value of its share portfolio.

However, the reverse can also be true; if an investment trust is unfashionable its shares could have a below-market value price.

Most trusts publish their Net Asset Value per share, or NEV on a daily basis. This is the total value of an investment trust’s shares minus its liabilities and debts divided by the total shareholders.

Simply put it is the value of the fund per share.

Comparing the NEV to the share price can give you some idea of the current level of demand for shares in the trust.

If the shares are more expensive than their NEV value then they are deemed to be at a ‘premium’ if they are cheaper they are considered to be ‘discounted’.

You may assume that buying discounted shares will give you a better chance of a profit, as they cost less than the asset value of the fund; however this may not be the case, as there is no guarantee that discounted shares will climb in value.

Instead treat the ratio between the share price and the NEV as an indicator of popularity.

Gearing

Another difference between an investment trust and other grouped investments is that the fund manager of an investment trust is allowed to borrow money to buy shares.

This process is called Gearing and means that a fund manager has more leverage and can chase greater returns for your money.

However, it is also more risky as it can leave a fund over exposed and owing money if the borrowed funds are poorly invested.

If shares that the borrowed funds were used to purchase also decrease in value then you could find yourself not only losing your capital, but also having to pay more to cover the losses.

Although this may sound alarming, if a fund manager wants to speculate in this way he or she will usually have to get the approval of the investment trust board, which represent investors’ interests, before being able to proceed.

If you are concerned that gearing would put your money at too great a risk then there are many investment trusts that don’t use it as part of their investment strategy.

How to invest

Ask – are you ready to invest?

If you are looking for a short term home for your money an investment trust is unlikely to be a good choice.

As a rule, investment trusts should be regarded as mid- to long-term investment accounts and not as a way to make a quick profit.

For investing to be worthwhile, you should be happy to lock your money away for at least 5 years, be be happy to place your money at risk and even willing to put more money in should the investment trust speculate poorly.

It is also recommended that you should already have suitable savings in cash before investing for the long term.

If you feel that you might need access to the money should you face an unexpected bill then you should consider putting the money into an easily accessible Cash ISA instead.

ISA Wrapper

As with other grouped investments you may be able to invest in an investment trust through an ISA to protect your profits from tax.

If you haven’t yet used your annual ISA allowance then you may want to select an investment trust that allows you to protect your money from the taxman with an ISA wrapper.

You also have the option of transferring money from an existing Cash ISA into an investment trust Investment ISA without losing your money’s tax free status; however once you do this you can’t then transfer your money back to a Cash ISA at a later date.

If you are considering transferring from a Cash ISA you will need to contact the investment trust company to arrange the transfer, if you simply withdraw the money it will lose its tax free status.

Are shares available?

Unlike other grouped investments your choice of investment trust may be restricted simply by what funds currently have shares available at any given time.

Make sure to eliminate trusts that are currently at share capacity, as you won’t be able to invest in them until current investors decide to sell up and shares become available.

What do you want?

In general, people invest in an investment trust for one of two reasons: to increase the value of the money they invest, or to draw an income from their investment.

In most cases younger investors tend to seek capital growth, while more mature investors approaching retirement or no longer working, may be more interested in income generation.

Investment trusts should state clearly what the trust aims to provide for investors – this information should be clearly available on their respective websites.

Some investment trusts will be solely focused on maximising profit while others be set up to provide income, others aim to provide a balance between the two.

Deciding what you want from your investment should help you narrow your options.

What will you have to pay?

Charges for an investment trust tend to be lower than unit trusts or OEICs, but these are still very much worth checking before you invest.

As with other pooled funds you will usually need to pay a charge when you initially deposit funds, however the amount can vary depending on how you invest.

Often investment trusts have different levels of fees for lump sum depositors and monthly investors so double check.

In addition to an initial deposit fee you are also likely to be liable for an annual administration fee, usually between 0.5% and 1%.

Where to invest

After ruling out investment trusts that don’t have any shares available and those that don’t fit with your investment aims, you will need to compare the remaining trusts to choose a fund best suited to your needs.

For more information on how to choose a fund to maximise your returns read our 9 Steps to Finding an Investment Fund That Will Maximise Your Profit.

You can also use our investment trust comparison tables to compare the different investment trusts on the market.

Moving your money out of an investment trust

When you withdraw your money from an investment trust, you may have to pay withdrawal fees and, depending on your profits, capital gains tax (although if you have invested through an ISA you will avoid tax on that amount).

While withdrawal fees should not necessarily put you off a particular investment trust if it meets all of your other criteria, it still makes sense to check if your trust has any withdrawal fees before investing.

What are your other options?

If you are left feeling unsure whether an investment trust if the best option for your circumstances there are a couple of alternatives you may want to consider.

Unit trusts and OEICs are similar to investment trusts in many ways but perhaps better suited to first time investors. Read our guide, Unit Trusts & OEICs: An Ideal Solution for Cautious Investors? for more information.

The Risks Of Forex Trading

Posted by admin on May 19th, 2012

Find out why you shouldn’t start trading Forex until you really know what you’re doing.

As with any form gambling, you should never bet more than you can afford to lose. However, the Forex market is is particularly volatile and very difficult to forecast. This means that there are high risks associated with trading foreign currency.

Although longer term changes in foreign currencies tend to be gradual, currencies are sometimes subject to dramatic shifts over short periods of time.

It is this short-term volatility, combined with the fact that you trade on a margin, that exposes you to the very real risk that you could lose a lot more than you ever wanted to invest.

Although you can reduce your level of risk by using instruments like stop losses, diversifying your trades across a number of currencies and keeping your margins small, you need to be aware that Forex trading is a highly complex business and should not be undertaken lightly.

Child Trust Funds

Posted by admin on May 19th, 2012

We tell you all you need to know about using a Child Trust Fund to build a nest egg for your children’s future.

Trust funds are something most of us associate only with the very rich. The government’s Child Trust Fund (CTF) initiative has however changed this. Most of us remain unaware of the who and how this fund can be tapped.

What is the purpose of the Child Trust Fund?

The government started the initiative to try to encourage younger people to develop good savings habits. The idea is for future generations to have some assets available when they grow up to invest in funding their education or buying a home.

Who is eligible?

All babies born between 1st September 2002 and 1st January 2011 qualify for the Child Trust Fund . Following an announcement by the Chancellor in the 2010 budget new child trust funds contributions will cease completely after 1st January 2011.

The amount of money each child received was dependent both on their family’s financial situation and when they were born.

Most children born before 2nd August 2010 received £250, but this increased to £500 for those who qualified for the full Child Tax Credit.

Children born between 2nd August 2010 and 1st January 2011 will receive £50 instead of £250 and £100 instead of £500 respectively.

In the 2009 budget the Chancellor announced that an additional £100 a year will be contributed into Child Trust Funds for children with disabilities, and an extra £200 for children with severe disabilities. Following an announcement in the 2010 budget these payments will stop in April 2011.

How do you set it up?

Parents do not need to make a separate claim for their child’s CTF entitlement. Once child benefit has been awarded and their eligibility checked a voucher for the first government payment is sent to the child benefit claimant.

This voucher can only be used to open a CTF. It must be lodged with a bank, building society, investment, insurance or other financial company that will establish a CTF in the child’s name.

How much is it worth?

For children who were born between 1st September and 5th April 2005 the value of the initial payment was slightly higher, with the majority receiving £256 while those in receipt of the full Child Tax Credit received £512.

Before 1st of August 2010 when a child reached the age of seven their funds were topped-up with an additional government payment of £250 or £500 (if they qualified for the full Child Tax Credit and their family’s income was below a certain threshold). Following the 2010 budget this additional payment was cancelled from August 1st 2010.

Trust funds can also be topped-up by relatives and friends of the child by up to £3,600 a year. The money saved in CTFs is not subject to any tax . Despite the cancellation of new Child Trust Funds as of January 2011 all existing funds can still be managed and topped up in the same way until the child turns 18.

What types of funds are there?

Parents can choose between 3 different types of CTF for their children; a simple deposit account, an investment fund or a stakeholder account.

The deposit account is just like a standard savings account with no risk to the money but with little growth expected over the lifetime of the account.

The investment fund invests the money in the CTF in the stock market. This exposes the money in the account to risk as the value of investments can fluctuate. The amount of money the account can potentially earn is however much higher than that earned in a deposit account.

The stakeholder account also involves investing the money in the stock market. Higher risk investments are made in the early years with investments made in the later years kept as low risk as possible. The charges for this type of account are capped at 1.5% a year.

Companies running the CTF are obliged to take deposits from as little as £10. There is a list of registered CTF providers on the Inland Revenue’s website, www.hmrc.gov.uk/ctf/.

If the child’s parents fail to choose a provider within 12 months the government will choose one and set up a default stakeholder account.

Who controls the money?

Parents are responsible for the CTF until their children reach the age of 16. Children are allowed to control their own fund from this age but have no access to the money until they turn 18. Once the child is 18 they have access to their savings and it is then entirely up to them how they put the money to use.

Opening a small savings account at the post office has long been a popular way of first introducing children to the world of finance. However, the CTF scheme gives every child access to this introduction as well as a potentially sizeable cash sum to make a decision about when they reach the age of 18.

Tips To Getting Help with Childcare Costs

Posted by admin on May 19th, 2012

If you pay for nursery or a childminder it’s likely the cost of childcare takes up a large proportion of your income. We explain how you can get help with the cost of childcare so there’s more money in your wallet at the end of each month.

It’s fair to say that the cost of child care for many people is much greater than they bargained for.

In fact, child care now takes up on average 28% off a UK family’s income, a sizeable chunk of money which you could put to good use elsewhere.

But is a paying expensive child care prices unavoidable or are there ways to make it more affordable?

What are your options?

If you need to reduce your child care costs without giving up your day job then you have a number of options:

Child tax credits

If you and your partner are working at least 16 hours a week and your total household income is below £42,000 then it’s likely that you’ll qualify for child tax credits.

Essentially this is cash from the government paid specifically to help cover the cost of childcare.

Even if you’re not working then you may still qualify, especially if you are on maternity or paternity leave or have been signed off sick from work.

Equally even if your household income exceeds £42,000 you could still qualify for child tax credits, especially if you have more than one child or care for a disabled child.

Depending on your circumstances you could receive anything up to £13,345 a year in child tax credits, more if you have two or more children.

Child tax credits are paid directly into your bank account so you can use the money to cover some of the cost of childcare.

Visit the HMRC website for more information and to find out if you qualify for child tax credits.

Childcare vouchers

One of the most widespread and popular ways to cut childcare costs is to use childcare vouchers, bought through your employer and paid for directly out of your salary.

You can use childcare vouchers to pay for childcare with a registered childcare provider (such as a nursery, playschool, childminder or after school club).

There are a number of tax breaks that you’ll be able to take advantage of by paying for childcare with childcare vouchers, together they could see you save anything up to £55 a week; that’s potentially over £1,000 a year. You’ll be able to double this if both you and your partner take advantage of the scheme.

The main benefit of using child care vouchers is that they can be purchased directly from your net salary, before tax and national insurance are deducted from your pay. This means you get more childcare for less money so it’s well worth investigating.

For most people using childcare vouchers can help to cut the cost of childcare, however if you already receive child tax credits then this may not be the case.

This is because the amount you receive in child tax credits is partially determined by how much you pay for your childcare. As any childcare you pay for using childcare vouchers will be excluded from your child tax credit assessment so you may qualify for a lesser amount of child tax credits, even though you’ve still paid for childcare vouchers.

Child tax credits or childcare vouchers?

As using child tax credits and childcare vouchers in combination isn’t likely to be beneficial you need to work out which option will help you to save the most money before you apply for either scheme.

You can use the calculator on the HMRC website.

Employee crèche

If you have the option available to you, using an employee crèche could be a good way to cut your child care costs.

If your employer partially subsidises the cost it may well be a cheaper option than independent child care. Of course, it is also likely to be in a convenient location in relation to your place of work so you cut down on travel time and costs too.

However, even if you have an employee crèche available it still makes sense to compare the costs with other local nurseries and crèches in your local area to ensure you’re getting the best price.

Flexible work

Under current UK legislation an employer must seriously consider any suggestion or request for flexible working hours.

While this doesn’t mean they have to accept your request to work outside the standard 9-5, they cannot simply dismiss it out of hand.

As such it’s worth looking at whether you can reduce the amount of childcare you need to pay for simply by changing the times you and your partner work.

For instance can you start later or finish earlier, or even take a day or afternoon off (and make up the time on the other days you work) each week so you need fewer hours of childcare.

Use relatives

Taking advantage of the enthusiasm of grandparents and other relatives can not only strengthen your child’s relationship with their extended family but can also save you money on child care.

Although you may feel guilty about asking family members to look after your children while you’re at work you may be pleasantly surprised how enthusiastic they are to be involved.

Speak to family or friends that you feel might be willing to look after your children, and see if they’d be able to help out on a full time or part time basis.

You can also suggest payment or other ways you can re-pay them indirectly (although you will only be able to claim financial help with the cost of this childcare if they register as an official childcare provider).

Even if you decide to pay a friend or family member they are likely to be significantly cheaper than a qualified nursery.

Does work pay?

When it comes to cutting the cost of childcare, it is worth looking at whether you would be better off if you or your partner reduced the number of hours you work, or even stop working completely.

Remember to factor in the cost of commuting and other costs into your calculations.

If working is actually costing you, you should weigh the real value of continuing to work and seriously consider whether you would be better off financially if you gave up work to look after your children.

This decision isn’t going to be clear cut as you’ll need to think about how giving up work will affect other factors, such as your position within your company, career aspirations and the appeal of spending more time with your children.

That given, you need to weigh up all these different factors rather than just working out the hard maths to find the cheapest option.

Classic Car Insurance

Posted by admin on May 19th, 2012

How to get quality insurance for your classic car, for less.

The insurance needs of owners of classic cars differ greatly from those who require regular insurance. For this reason, several insurance companies specialise in providing specially tailored insurance for both classic cars used for social and domestic driving and those kept in storage.

The majority of classic car insurance policies will be based on an agreed value of the car, this is the maximum amount the insurer will pay out if the car is damaged beyond repair or stolen. When choosing an insurance policy check that your valuation is guaranteed by the insurance company.

Most classic car insurers will require that the car has an annual mileage of less than 7500 miles and many offer discounts on the insurance premium if a lower maximum mileage is agreed. Additionally, discounts may be given for membership to a classic car club or association (check with insurer) and many specialist companies offer cover for classic car rallies and trials.

By comparing quotes from several classic car insurers, you should be able to find a comprehensive level of cover for your cars, whether you require cover for laid up or in use classic cars.

5 Top Tips For Savings on Your Insurance

Posted by admin on May 19th, 2012

Sticking with the same insurance year in, year out could mean you’re missing out on hundreds of pounds worth of savings. If that isn’t enough, here’s 5 more reasons why it pays to shop around.

If you haven’t switched insurance provider in the last 12 months then you could be missing out on much more than potential savings.

Getting into the habit of regularly reviewing your insurance policies will not only get you the best price, but it will also mean that you have the best possible cover and make sure you have a policy that will pay out when you need it most.

Our lives and circumstances are continuously changing and shopping around for your insurance is the only way to make sure you are always adequately protected.

Still not convinced? Here’s our top 5 reasons why it pays to shop around for your insurance.

1. You learn that loyalty doesn’t pay

When it comes to insurance, loyalty tends to be a one-way street. Fail to shop around and it is your insurance provider who will be the main beneficiary when it comes to renewal time.

As an experiment, try gathering together your renewal notices from the last few years. Does a pattern begin to emerge? You will most probably notice that your insurance provider has rewarded your loyalty by steadily increasing your premiums year upon year. And why wouldn’t they? They are in the business of making money, after all.

Shopping around will almost always help you save on your insurance as your current provider will only ever put your premiums up when it comes to renewal time.

If you are determined to stay with your insurance provider then you can always use a competitor’s quote to help drive down the price of your renewal.

2. Your insurance will pay out

Shopping around isn’t all about getting the cheapest policy possible. The whole point of taking out an insurance policy is to make sure that you will be compensated if the worst should happen.

Ensuring that you have the right cover can not only mean the difference between your policy paying out or not, but it’s also a great way to keep the cost of your insurance down by not paying for cover that you do not need.

3. You don’t pay for cover you don’t need

Unfortunately, time waits for no-one and our lives are constantly changing. Getting into the habit of reviewing your insurance can help ensure that your policy keeps pace with any major changes to you personal circumstances.

This can have many benefits, particularly when it comes to motor insurance. Racking up another year’s no claims bonus, moving in with a partner, a change of job which lowers your annual mileage or your car dropping in value can all result in lower premiums

Likewise giving up smoking could bring the cost of your life insurance down, while if you suddenly inherited a valuable family heirloom you would want to make sure that it was covered by your home insurance policy.

Shopping around will help you identify the policies and providers that will enable you to take advantage of any changes to your personal circumstances and reap the benefit of reduced premiums.

4. You stay up to date

The insurance market is always changing and it now seems as if there is an insurance policy out there for just about every eventuality.

But how many of us could have foreseen the level of disruption caused by the volcanic eruption in Iceland? Thousands of stranded holiday makers found themselves out of pocket after cutting costs and corners by going for an ‘off the peg’ insurance policy without checking what they would be covered for.

While no-one could have predicted such a dramatic event, shopping around is a good way of keeping your finger on the pulse of the insurance market.

Forewarned is forearmed, as the saying goes, and it could mean the difference between being adequately covered for almost all circumstances and sleeping on an airport chair for a week.

5. You get the new customer treatment

The insurance market is extremely competitive and the biggest players are always vying for your business. Sticking with the same insurance could mean that you are missing out on big savings from the kind of introductory offers and discounts designed specifically to attract new customers.

Unfortunately, existing customers rarely get to reap the benefits of these kinds of offers. Building up a healthy no claims discount with your existing insurer won’t result in your premium going down unless you switch providers.

Even changing how you pay for your insurance can be an opportunity to make savings, especially if you are paying for it monthly – as this often bumps up the cost of cover considerably.