Mums Finance

In Australia we have Medicare – in the UK they have the NHS – in America they have…well, they have to insure or save…or just wait their turn. I am talking about healthcare schemes and it seems that no matter what system is in place you end up either on a waiting list or having to fork out a lot of money. Having insurance certainly makes a big difference – in the US for sure – but despite the best intentions of schemes like the NHS you often are better off going private if you can afford to.

In  Australia you can insure yourself for private health care, in the UK you simply have to pay for it. It is not out of the range of many people despite the costs involved – what you need to do is create a health savings account for yourself which will pay for a private hospital and your choice of doctor. It could be well worth it in the long run considering the waiting lists right now – and the risk of contracting one of those deadly infections that are endemic in the public hospitals.

Popularity: 6% [?]

TAXPAYERS caught up in the coding notice fiasco have been told they must work out for themselves if their code is correct but tax experts argue that most people have little hope of understanding the codes. Pensioners, whose codes are especially complex, can have particular problems.

Danger signs are codes such as:

• BR – you will be taxed at the basic 20pc rate on all income because the tax-free allowance of £6,475 has been taken away;

• DO – you will be taxed at the higher 40pc rate on all of your income; and

• OT – usually for pensioners. You will be taxed at the basic rate on all income without being given a tax-free allowance.

Errors all taxpayers should watch for:

1) THE PERSONAL ALLOWANCE IS WRONG: This should be £6,475 for most people aged under 65; £9,490 for those aged 65 to 74; and £9,640 for those aged 75 and over.

2) THE TAX CODE IS WRONG: This results in some or all of the personal allowance being taken. Most common are the BR, OT or DO codes listed above.

3) DUAL CODES: People get more than one coding notice for the same source of income. The first may be too high, the second too low, but neither is right.

4) AN EXTRA ‘1′: This mysteriously appears at the front of someone’s salary, putting up their income by £100,000 and resulting in the removal of all their tax allowances.

5) RECORDS OF ONE-OFF TAX PAYMENTS ARE LOST: As a result, HMRC reduces the code for the next tax year (2010-11), so the money will be collected a second time directly from their salary. In one case, it tried to collect money which was paid in 2005.

6) COMPANY CAR TAX: Data may be two or three years out of date. This can mean an employee being taxed for the wrong car or for the wrong amount on the right car.

7) BENEFITS IN KIND and allowable expenses might be missing or out of date. This could result in too much or too little tax being taken.

8 OTHER INCOME is deducted from the tax allowance, such as untaxed savings interest, but the figure is wrong.

9) THOSE WHO HAVE MOVED JOBS find their tax code relates to a post they may have left two or three years ago.

This last point (9) is a very common occurrence and has recently happened to me; I worked like a trojan for Tesco over the Xmas period to discover my monthly pay was roughly half what it should have been – Tesco had me down under a tax code which saw me paying the highest amount of tax possible. I have had this corrected and now have the correct tax code however what about the two and a half months of tax that I overpaid – almost £180 worth? I assumed I would be in line for a cheque but having enquired I now have to wait until at least April to get my money back. Funny, HMRC are very quick to take what is due to them…but slow enough when it is time to pay it out.

Popularity: 10% [?]

Millions of people approaching retirement are being hit by a crippling combination of large mortgages and no savings.  Those aged between 55 and 64, known as ‘pre-retirees’, have been unrealistic about their pensions and are living in a state of denial about their finances. Many people never look at their pension statements, simply filing them away every year, hoping they will have enough to pay for a good retirement – which most of them will not. Pension experts warn against the widely held approach of using your house as your pension because few people actually want to move out when they get to retirement age.

And what about those people today who have never worked a day, having spent their most productive years on benefits – who will pay for their retirement and will there be any Govt pensions to go around at all in the future? my guess is they are in very big trouble.

Parents these days are remortgaging their homes to give money to their children to help them on to the property ladder. Others use their house as a ‘cash machine’, taking out money to put into a business, fund a better lifestyle or pay off debt and one can only blame those ‘cash equity’ tv commercials for the increase in such activity. I feel they are very bad decisions to make at such a time in your life. In the past, a typical pre-retiree would have had no mortgage, more savings and would have retired by the age of 65. Separate research yesterday highlighted the nightmare facing pensioners who have been saving all their lives – with little to show for it.

People approaching pension/retirement age need to seriously look at their finances and the lifestyle they will be able to afford; this might mean telling ‘the kids’ to find their own desposit for the house they want to buy – your retirement is at stake, let them work out their own problems.

Popularity: 13% [?]