July 26th, 2019 | Andrew Hagger | News

26 July 2019 It may be summer holiday season, but the majority of British households (57%) are looking to tighten the purse strings this summer in order to lower the cost of running a home. 

At a time when it has been reported that, 10 years after the recession, the majority of Brits are still living in the ‘age of austerity’ new AA Financial Services research suggests only one in four Brits are splashing out on a family holiday in the sun this summer. Instead many are focusing on how they can make domestic cutbacks to make their money go further.

The new AA Financial Services data suggests young families (parents of children under the age of 5) are the ones prioritising spending to add value to homes rather than going on holidays, and are the most likely looking to save money on bills and monthly commitments (76%) this summer – from switching supermarket to hunting around for cheaper insurance.  

Top 10 cost saving measures adopted this summer to lower the cost of running a home:

National average and by number of children in household

The budgeting pressures felt by young families coincides with them being the group that have spent most heavily on home improvement projects since the spring – an average of £9,355 compared to a national average of £4,123.  

Young parents are also most likely to have raided their savings (50%) and to have taken out additional finance (32%) to fund these DIY projects. The AA Financial Services research suggests the need to expand or adapt the home for the arrival or needs of young children has financially stretched many young families and forced them to look at a series of cost cutting measures to keep the family finances under control. As a consequence, parents of under 5s are also less likely than the national average to say they will be splashing out on a holiday in the sun this summer (20% Vs. a national average of 26%).

Warren D’Souza, Head of Insight at AA Personal Finance comments: “Our latest research suggests homeowners with young children are now more likely to be making budget cutbacks on everyday bills and commitments than university students. Many have drawn on savings and taken out loans to adapt their homes to make them baby and child-friendly but, for many, the consequence is they are having to work hard to free up disposable income by reducing their monthly bills and are also foregoing summer holidays as a result.” 

July 26th, 2019 | Andrew Hagger | News

26 July 2019 Whilst we may be living in an increasingly inclusive society in the UK, when it comes to physical and mental disabilities, those who suffer with these issues can still sometimes struggle to achieve financial independence.

This is also borne out by the numbers, which reveal that disabled people’s finances are continually being impacted by barriers to employment and a series of stringent welfare payment changes. Back in 2014, it was found that 3.7 million disabled people lost up £28 billion of support as a result of welfare system changes, with some being hit by multiple simultaneous reforms.

It’s estimated that a quarter of disabled people live in poverty in the UK, which is almost unthinkable in a progressive and modern society. This makes the road the financial independence a challenging one for disabled people, but what steps can be taken to plot a more successful course?

1. Plan your career path

There’s no doubt that employment barriers represent a significant challenge for disabled people, and one that varies according to individual circumstances. Nearly 20 million working-age adults currently have a physical, sensory or cognitive disability in the U.S. alone, with the rate of employment within this demographic estimated to be just 33%.

This not only prevents those affected from fulfilling their earning potential, but it also creates issues in terms of their mental wellbeing, purpose and their underlying sense of identity.

Hence it’s important for people with a disability to identify viable career paths, which enable them to sidestep their individual issues and leverage their skills to their advantage.

• Get Access to your Own Private Vehicle

Many disabled people can also struggle overcoming universal barriers to the UK jobs market, from tangible skill gaps to the lack of private transport that gives job-seekers the ability and flexibility to be able to get from A to B.

Fortunately, you can negate the latter issue by investing in your own private vehicle, and one that has been modified to suit specific disabilities.

Specialist vehicle providers such as Allied Mobility can help to connect you with accessible and affordable vehicles, enabling you to become more independent and pursue viable job opportunities as they appear.

• Use Free Tools to help Manage your Finances

As the rate of employment for disabled people in developed economies shows, even those who are able to plot viable career paths will typically have less opportunities than individuals who don’t have a registered physical or mental disability.

This means that your earning potential may well be restricted, creating a scenario where you need to manage your money and achieve financial independence.

This is particularly true in the existing economic climate, where sluggish real-wage growth and the rising cost of living continue to squeeze people’s earnings.

So, in addition to having a bank account, you should look to draw up a personal financial budget that enables you to manage your outgoings every month without going into the red and being penalised with costly bank charges.

July 24th, 2019 | Andrew Hagger | News

24 July 2019 Two in five (42%) grandparents will be relied upon to provide childcare during the upcoming school holidays, according to new research by Lloyds Bank.

Part of the ‘How Britain Lives’ study, the UK-wide analysis conducted in partnership with YouGov found that 61% of working parents regularly rely on childcare support from nurseries, childminders and family or friends throughout the year, and this summer an estimated 5.3 million grandparents will be called on to help.

The savings for parents are likely to be significant. The poll found that UK families spend an average of £350 per month on childcare. That means, based on the UK’s average salary, parents are forking out 20% of their monthly disposable income to cover childcare costs, a figure likely to be even greater during the school holiday months.

Of the grandparents who provide childcare support, one in four say that on top of caring for the little ones, they also cover the costs of keeping them entertained with activities, and another 70% buy their grandchildren regular treats while looking after them.

Miles Ravenhill, Director at Lloyds Bank said: “The cost of childcare can be a big financial burden for parents, especially during the summer holidays when most children can be off school for up to six weeks. Our latest research has found that grandparents are set to support many families across the country, helping parents juggle work and childcare during the school holidays. Families who don’t have savings to fall back on could find that the summer months are a particularly hard time if they don’t have friends or family who can help.”

It isn’t just the school holidays when families turn to grandparents for help, with around a third relied upon at other times in the year for the school and nursery runs (34%), providing before and after school care (32%) and helping out on the weekends (36%).

On average, grandparents report spending eight hours a week caring for their grandchildren. Based on the average salary of a childcare worker at almost £8, that means grandparents are giving the equivalent of £3,200 worth of childcare throughout the year.

Despite the graft, two thirds of grandparents said they were asked to help and were happy to do it. A third said they proactively offered their support.

Seven in 10 of the grandparents polled say helping means they get to spend more time with their grandchildren than they did with their own grandparents.

July 22nd, 2019 | Andrew Hagger | News

22 July 2019 First-time buyers are increasingly setting their sights on larger, detached homes while starter-homes of the past are being overlooked, according to findings from Yorkshire Building Society.

An analysis of the lender’s first-time buyer mortgages since the financial crash reveals the number of home loans for detached homes has doubled, while those for terraced houses have fallen to a third (34%) from almost half (46%). 

Larger homes are also increasingly sought after by first-time buyers compared to 2007. Of the mortgages analysed, home loans for four and five bedroom homes increased significantly while demand for one bedroom homes fell.

The Yorkshire also found the average age of a first-time buyer slightly increased to 31 years old over the decade, from 30 years old.

Charles Mungroo, senior mortgage manager at Yorkshire Building Society, said: “Our findings show how would-be homeowners’ attitudes to buying their first homes have changed over the years, with more focus now seemingly on larger, detached homes compared to the starter homes that once were. It no longer seems to be a first step on the property ladder for many, more the forever home.

“Schemes such as Help to Buy, the removal of stamp duty for first-time buyers and the wider availability of mortgages requiring smaller deposits, will have helped those taking the first step on the property ladder, financially allowing them to look at larger properties.”

Research by the Yorkshire indicated almost a third (32%) of potential first-time homeowners would aim for a detached house as their first property and nearly half (49%) would consider a semi-detached house. Less than a quarter (24%) would be happy to settle for a studio or flat. To fund their purchase, would-be first-time buyers indicated they would be prepared to save for up to 10 years. 

Charles added: “In a housing market often deemed too tough for aspiring homeowners, it’s encouraging to see the strong ambition of first-time buyers and the importance they place on owning a home, which for many is deemed the key milestone in life.”

July 19th, 2019 | Andrew Hagger | News

19 July 2019 Deciding whether to save or invest your money can be difficult.

Saving may be safer, but with interest rates at rock bottom it’s not going to earn you much in the way of a decent return on your capital.

The impact of inflation could all but wipe out any interest returns hence
why people consider Investing as a potentially more lucrative long-term option.

While investing comes with an element of risk, the possible rewards can
make it an attractive option for some consumers.

Here, are five reasons why savings shouldn’t be left to stagnate in poor
paying cash savings accounts.

1. Passive investments can generate better
returns

While it can be tempting to keep you cash savings in the bank or building
society, passive investments can actually prove to be much more
lucrative.

Yes, you’ll receive a certain percentage of interest on your savings, but that still doesn’t match the income you could generate from a passive investment.

These types of investments have been popular for many years, with $60 billion poured into them in 2013 alone. It’s well documented that investors often benefit from above average returns from low-risk passive investments, when compared to traditional cash savings.

2. Providing greater returns over time

Any type of investment has the potential generate healthy financial returns over time. That is of course, providing you make the right investment choices that meet your objectives and risk profile.

Using the services of a professional regulated asset management company, can help you assess the risks and ensure you are investing in the most suitable funds to meet your needs.

Compared to simple cash accounts, the amount you could earn back over time with the right professional guidance is significant.

3. Helping you to build up a good
retirement fund

Many people focus on saving money towards their retirement. While this is
a great option for those in their early twenties, for those who have started to
save later in life, the returns on their savings might not be enough to live
off once they retire.

With investments on the other hand, with professional financial advice you’ll should be able to build a healthier retirement pot to help you live out your later life without niggling money worries to contend with.

4. Providing you with a regular income

Cash flow is frequently one of the leading challenges for people today.
The cost of living in the UK remains high, and for some it can be difficult
making it through the month.

With the right investments, it can provide you with an additional regular income.

5. Your investments can be tailored over
time

There are so many different sectors, countries and specific markets you
can invest in.

The choice and variation will enable any advisor worth his salt to tailor your investment portfolio to match your changing needs.

In summary, leaving your bank balances in cash may seem like the easy and
safe strategy, however with a little professional guidance a portfolio of
investments can help deliver far better returns over the medium to long term.

July 18th, 2019 | Andrew Hagger | News

18 July 2019 Immigration is a hot topic in the UK right now, however it’s easy to forget how many British expats reside in the EU.

According to data from the United Nations, there were just over 4.5 million Brits living abroad in 2017, with 1.3 million residing in EU member states. Whilst this number is thought to have fallen slightly since the Brexit negotiations began, it remains a significant number.

One of the key challenges for expats is managing their money when relocating, and understanding what they can do to ensure their finances are adequate, safe and accessible.

Here are three tips to help anyone thinking of relocating to Europe:

• Set Clear Financial Goals

If you relocate abroad, the chances are that you’ll seek out guidance from the likes of Withers Worldwide an immigration and relocation specialist.

By the same token, it makes sense to take some professional financial advice when looking to manage your funds as an expat, this will help you to set your goals and ensure you have sufficient funds for your new life overseas.

You should also get an understanding of international currency fluctuations, which can impact on your financial goals when switching funds between different currencies.

If you do your homework you won’t be in for any nasty surprises and associated stress and more likely to enjoy your new life abroad.

• Understand the Tax Implications

One of the most common misconceptions surrounding expats is that they immediately exempt from their home nation’s tax system, but it’s not as cut and dried as that.

For example, an expat who is longer classed as a UK resident may still be responsible for the tax levies on profits generated by a business or property located in the UK, whilst the same principle applies to accrued pension income.

This creates a complex tax situation, and one that may require you to pay levies both at home and abroad, therefore take some advice from an expat tax specialist before you u sticks and leave the UK.

• Checking the Local Cost of Living is Vital

If you’ve relocated for the purpose of work, the chances are that your earnings may be similar to what they were in the UK.

The same cannot necessarily said about the cost of living, however, which can vary dramatically from one country to another and have a significant bearing on your disposable income levels as an expat.

So, before you relocate, you should carry out some research on your chosen destination, and look to factor in any cost increases or potential savings on your monthly budget,

This type of proactive approach can be really rewarding and reduce worry and stress, especially if you’re looking to manage your money carefully and save for the future.

July 17th, 2019 | Andrew Hagger | News

17 July 2019 Renting out property can be lucrative source of income. It yields many opportunities to landlords, but like with all potentially profitable ventures, it also comes with its fair share of downsides too; namely paying tax on rental income.

Paying tax is a positive thing when you look at the bigger picture. It helps the economy tick along and funds a wide range of public services. For landlords though, fees can be a heavy burden…but they are not always entirely necessary with the right (and legal) professional assistance.

Here’s a rundown on how private landlords can pay fewer taxes on their rental income.

What is a rental income?

A rental income is the sum of money a tenant pays to the landlord in exchange for living in their property. It also includes things like utility costs, parking fees, and use of furniture that’s owned by the landlord. It can also fluctuate based, where the property is located or its overall value, and if the landlord is employed or not.

Allowable Expenses

Although some landlords are starting to feel the system is stacked against them and overly favours tenants, rental income tax is one area where things are surprisingly fair. First, you need to really understand how the system works. If you make all your money from renting out properties, you need to register as a fully-fledged business with HMRC to be taxed as an independent firm. If you’re employed alongside renting out a property or two, you’ll only need to pay tax on the profit you make from renting your property to a tenant; which is often simpler and cheaper!

Private landlords can claim allowable expenses in certain scenarios, providing they were exclusive to renting out your property. This can all be deducted from your overall rental income, which means you’ll be liable for less tax. These tax-free expenses can include landlord insurance, mortgage interest, repairs and maintenance, service charges, household costs and more.

It’s worth keeping a close eye and making comprehensive records of these costs as they are vital to keep your tax bill to a minimum.

Be sure to carry out your own research on which allowable expenses might be allowable in your particular situation. Private phone calls and personal expenses can’t be included, so try to focus on the things that’re exclusive to your role as a landlord.

Conclusion

It’s possible to pay fewer taxes on rental income with the right level of awareness. You need to have a thorough understanding of what you’re taxed on and why, and then from there you can start to make distinctions between personal allowances in being a landlord. Take it seriously and research your tax obligations independently, and you should be able to make savings and put more cash in your pocket.

July 15th, 2019 | Andrew Hagger | News

15 July 2019 Almost 3.8 million people aged 22-29 are saving below the recommended level for a comfortable retirement, according to the latest Scottish Widows Retirement Report.

Despite auto enrolment, one in six people in this age group still aren’t saving at all for their retirement. Yet, 38% of under-30s say they would save more into their pension if they could access savings as a one-off to help fund a deposit on a first home. That would be the equivalent of 3.5 million young people increasing their long-term savings levels and helping to ensure a more comfortable retirement.

Property seen as priority over pensions

The average size of a deposit in 2018 was £32,000. A decade ago the average deposit was a third smaller at £21,366. This means getting onto the property ladder has become increasingly difficult, with the average age of a first-time buyer now 31 – the highest it has ever been.

As this trend continues, it could mean more people renting in retirement. They would need to save a significant amount more during their working life to cover this additional cost, whereas homeowners may have paid off their mortgage by the time they retire.

Tying together property and pension savings

To avoid a crisis of renters struggling in retirement, Scottish Widows is calling for flexibility within the pension system to allow young savers to withdraw up to half of their early retirement pot and put it towards a deposit on their first home. While some critics may argue this further depletes the long-term savings of young people, it is advocating for further changes that will increase savings levels overall to account for this.

It calls for the age at which people become auto-enrolled to be reduced to 18 alongside an increase in minimum contribution levels to 15% by 2030, with employers and employees continuing to share the cost. Scottish Widows is also calling for an annual government top-up of £500 – similar to the model used in Help To Buy and Lifetime ISAs. It points out that first home deposits tend to be smaller than the average (£32,000) and split between a couple. In this scenario, people would have much higher levels of savings, which would ensure accessing them for a property deposit is financially sound.

Pete Glancy, Head of Policy at Scottish Widows, said:

“Property ownership is a national obsession, but it is also a long-term investment that could support people into old age, either by avoiding expensive renting costs or providing a source of equity. We should recognise the fact that many young people will prioritise getting onto the property ladder ahead of saving into a pension, despite the powerful positive impact of compound interest by saving at an early age.

“This policy is focused on helping young people to move from renting, not to increase demand for housing. Of course, we still require appropriate government policies to ensure an adequate supply of housing and improve affordability.”

July 9th, 2019 | Andrew Hagger | News

09 July 2019 Customers can register today for a new savings account, Kepe, which promises to end the ‘loyalty penalty’ by automatically moving cash savings to get better interest rates.

Kepe plans to do for people’s cash savings and cash ISAs what auto-switching has begun to do for household energy bills. It removes the need to manually search for, and switch to, new accounts once initial preferential rates have expired.

Customers will be able to sign up to one account, just once, and from then on their money will be automatically moved to different savings accounts best suited to meet their specifc savings needs and offering the best rates available to each saver.

An initial panel of partner banks will be offering highly competitive rates across a range of easy access, notice, fixed term and cash ISA products. 

A ‘super complaint’ lodged by Citizens Adviceto the Competition and Markets Authority last month (June 2019) estimated savings customers had lost out on more than £800 million since September 2018. It claims this happens because higher rates are only offered to attract new customers.  

Kepe intends to tackle this by automatically moving money to get people better offers.

“There are several issues with the savings market at the moment, not least the loyalty penalty which is unfavourable to people who don’t actively manage their cash savings,” explains Karteek Patel, CEO of Crowdstacker, the financial platform behind Kepe.

“Also the FCA’s 2018 report ‘Price Discrimination in the Cash Savings Market’identifies people’s apparent unwillingness to switch accounts as one of the main reasons why they are losing money on their cash savings and cash ISAs,” Karteek continues.

“And it goes so far as to suggest providers are capitalizing on this by offering the lowest rates to the longest standing customers.”  

Kepe’s own research found that despite less than one in five (19%)  savers saying they are confident they are getting the best interest rate on their savings, a large majority of two-thirds (66%) say they are unlikely to bother switching.

The FCA report estimates that £117 billion of the money held in easy access cash savings accounts, and £21 billion held in cash ISAs, has been in accounts opened for more than five years.  Yet Kepe’s own research also reveals the number one criteria considered by savers when looking at account options is the interest rate offered.

“So that doesn’t make a lot of sense, people want better rates but they aren’t doing anything about it.  A lot of money is obviously just sat there not working as hard as it could,” Karteek continues.

“This customer inertia is owing to misplaced brand loyalty, and probably confusion caused by multiple product offerings and unclear communications.

“Kepe tackles all of these issues by automating the process of switching accounts so that money is never left in an account paying a lower rate of return than is otherwise available to each particular saver. 

Kepe customers will be able to select the terms they are happy to accept such as whether the cash is held in instant access accounts or not.  Similarly they will be able to set savings goals according to what they are savings towards.  

Each time a customer’s money can be switched to a better deal it will automatically be done removing the need for researching or form filling.  Customers will be notified when this happens and up to the minute information on the status of their cash can be viewed via their dashboard.  

In line with the priorities identified by Kepe’s market research the core offering will be protection provided by the Financial Services Compensation Scheme (97%), better interest rates (96%) and up to date information about account status (90%).

Anyone interested in opening a Kepe account can pre-register now at https://www.crowdstacker.com/kepe/register  to enjoy a range of early-bird benefits.  The full service will launch later in 2019.

July 4th, 2019 | Andrew Hagger | News

04 July 2019 New research from TotallyMoney and Moneycomms reveals 1 in 12 Brits wouldn’t notice a rogue £20 entry on their bank statement, potentially costing a total of £108m.

• 1 in 12 (5.4 million) people wouldn’t spot a rogue £20 entry on their main current account
• Assuming each person has one bank account, losses could be up to £108m
• 1 in 7 people only check their bank account once per month — or less
• 50% of people haven’t got their free credit report, an easy way to detect possible fraudulent activity
• To help customers stay alert to fraud, TotallyMoney has created a simple five-step plan.

Online statements and mobile banking apps make it easy to check your account. But, people don’t always pick up on some signs of possible fraud.

Recent survey results show that 1 in 12 people wouldn’t spot a rouge £20 entry on their statement.

There are 65 million active personal current accounts in the UK. So, assuming one person owns only one account, a staggering £108m, across 5.4 million bank accounts, could potentially be lost.

Banks and lenders are under increasingly more pressure to up their security. In the meantime, there are some things you yourself can do to detect fraud — and limit potential loss.

Alastair Douglas, CEO of credit experts TotallyMoney, said: “For some people, a £20 transaction they don’t recognise isn’t the end of the world. But, it could be tell-tale of a bigger issue.

“In the past, we had to rely on monthly paper bank statements. Now, thanks to mobile apps, our bank accounts are at our fingertips, making it easier than ever to check our outgoings.

“Spotting and reporting anything you don’t recognise — no matter how small — could stop an incident of fraud in its tracks.

“Another way to keep an eye out for fraud is by getting your TotallyMoney free credit report. You can see any financial activity made in your name, as well as see your balances and payments — so you can spot and report anything you don’t recognise.

“To make it easier to spot any of the potential signs of fraud, we’ve pulled together some of the best ways to get in the know.”

The TotallyMoney five-step plan

1. Use Online Banking Download your bank’s mobile app, or use online banking, to check your statement every couple of days. You can often even set up alerts to get notified every time a transaction is made.
2. Hold on to Receipts
   Keep tabs of your contactless card transactions, by keeping the paper receipts until the money is taken out of your account.
3. Check your Direct Debits
   Be aware of future direct debits and regular payments due before payday, so you know how much ‘spare spending money’ you’ve got available — a good way to avoid hefty overdraft charges, too.
4. Review your Statements
   Don’t ignore your monthly credit card and bank statements. Check that everything is as you’d expect.
5. Check your Free Credit Report Ensure you recognise everything on your credit report — especially credit searches.