shrewdcookie.com

Compulsory Financial Education?

shrewdcookie — Fri, 04 May 2012 14:53:36 +0000

Just a quick post as I am off for the long Bank Holiday Weekend, but I have been reading an interesting post by Lee over at FivePencePiece on the need for Compulsory Financial Education in our schools.

I wholeheartedly agree with Lee – we received not a single piece of guidance on personal finance whilst I was at school. it is quite obvious that the general level of financial education in the UK is low. Please read Lee’s article and support his efforts.

Simon

ISA 2012/13 – deadline tonight!

shrewdcookie — Thu, 05 Apr 2012 13:27:22 +0000

The end of another tax year is now upon us and you have until 23;59 hours tonight (5th April 2012) to use your ISA allowance.

Here is my ISA article – also check out Lee’s over at FivePencePiece

Self-Assessment – the deadline looms!

shrewdcookie — Fri, 27 Jan 2012 22:17:24 +0000

Just a quick heads-up people – the deadline for submitting your electronic deadline is fast approaching – 23.59 hours on Tuesday 31st January 2012.

This is the deadline for submitting your electronic return (paper returns were due in by 31st october 2011) for the 2010/11 tax year.

It’s also the deadline for payments due in January.

More info available on the HMRC site.

ISAs – the basics – 2011/12 tax year

shrewdcookie — Thu, 29 Dec 2011 02:04:54 +0000

Here’s a brief overview of ISAs (Individual Savings Accounts) – what you can and cannot do with them in the current 2011/12 tax year which ends on 5th April 2012.

What is an ISA?

An ISA (Individual Savings Account) is a tax-efficient form of saving or investment. It is tax-efficient in terms of income and capital gains tax. The actual rules are beyond the scope of this quick article but check the HMRC website for more info if needed. Basically, the are tax free in terms of income and capital gains taxes in your hands.

An ISA will be included in calculating your Estate value for probate and inheritance tax purposes.

What different types of ISA are there?

There are two types of ISA:

1. Cash ISA – a savings or deposit account on which interest is paid tax-free.

2. Stocks and Shares ISA – this is a an ISA which invests (normally through the investors own choice) in mutual funds (collection of shares managed by a fund manager) or directly into individual company shares.

Self-select ISAs allow you to choose your own funds and/or shares. Seek advice from an Independent Financial Adviser (IFA) if you’re not sure where to invest.

Investment Limits

Basically…..

1. Up to £10,680 in a Stocks and Shares ISA.

2. Up to £5,340 can be invested in a Cash ISA with any unused allowance being available for a Stocks and Shares ISA. E.g. if you put £2,000 into a Cash ISA you can still put £8,680 into a Stocks and Shares ISA.

Can I Transfer from one ISA provider to another?

Yes – approach the company to whom you wish to transfer to arrange this. Under no circumstances surrender the ISA in order to reinvest it. To retain its tax-efficient status, the transfer must be conducted by the plan managers – you will lose the tax-efficient benefits if you surrender an existing ISA

If I transfer an “old” ISA does this use my current years’ ISA allowance?

No – each individual has a new personal ISA allowance on 6th April each tax year, regardless of any previous ISA investment they may have made.

Can a husband and wife have their own ISA’s?

Yes, everyone aged over 18 has there own personal ISA allowance. It is currently £10,680 for the 2011/12 tax year. Joint ISAs are not allowed.

If I take out a Cash ISA and a Stocks and Shares ISA do they have to be with the same provider?

No. You can have a Cash ISA with your bank or building society AND a Stocks and Shares ISA with a separate investment house.

Is there any risk involved?

Cash ISA – generally no – if the bank or building society were to “default” then you should be covered by the Financial Services Compensation Scheme (FSCS). In terms of returns, there is no volatility involved as this is purely a deposit/bank account.

Stocks and Shares ISA – these do carry risk – the level of risk will depend on the fund(s) you invest in – some funds are risker than others and many investors like to have a spread of funds from different fund management companies and in different geographical sectors (e.g. UK. Europe, Far East etc…) or asset classes (technology, gold, oil etc…)

More information on the compensation schemes can be found at FSCS – please note you cannot claim on the FSCS if your plan simply falls in value due to poor fund choice or investment market conditions!!!

If you have any comments or questions please let me know in the comments section below.

Remember though – we don’t give financial advice on this site!

ISA Allowances 2011/12 Tax Year

shrewdcookie — Tue, 05 Apr 2011 17:43:22 +0000

At midnight tonight the new 2011/12 tax year starts!

ISA allowances are increasing from £10,200 to £10,680.

Of this £10,680, up to £5,340 can be invested in a Cash ISA, and any unused allowance between the amount you put into a Cash ISA and the overall allowance of £10,680 can be invested in a Stocks and Shares ISA.

For example, invest £2,000 in a Cash ISA from midnight tonight and you can still invest up to £8,680 into a Stocks and Shares ISA.

If you can afford to invest on a monthly basis, to benefit from pound cost averaging, the maximum each month (assuming 12 payments) is £890.

Any questions, add them below and I’ll answer them for you.

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ISAs – the basics – 2010/11 tax year

shrewdcookie — Sat, 19 Mar 2011 02:50:00 +0000

It’s that time of year again – as the end of another tax year approaches on 5th April we are now well and truly into “ISA Season”!

Here’s a brief overview of ISAs for those new to this form of savings/investment, as well as for those who may have a few queries they need answers to.

What is an ISA?

An ISA will be included in calculating your Estate value for probate and inheritance tax purposes.

What different types of ISA are there?

There are two types of ISA:

1. Cash ISA – a savings or deposit account on which interest is paid tax-free.

Self-select ISA’s allow you to choose your own funds and/or shares. If you don’t feel confident enough to make your own fund choice then consult an Independent Financial Adviser.

Investment Limits

Basically…..

1. Up to £10,200 in a Stocks and Shares ISA.

2. Up to £5,100 can be invested in a Cash ISA with any unused allowance being available for a Stocks and Shares ISA. E.g. if you put £3,000 into a Cash ISA you can still put £7,200 into a Stocks and Shares ISA.

Can I Transfer from one ISA provider to another?

Yes – approach the company to whom you wish to transfer to arrange this. Under no circumstances surrender the ISA in order to reinvest it – the transfer must be conducted by the plan managers – you will lose the tax-efficient benefits if you surrender an existing ISA!!!

If I transfer an “old” ISA does this use my current years ISA allowance?

Can a husband and wife have their own ISA’s?

Yes, everyone aged over 18 has there own personal ISA allowance. It is currently £10,200 and this is increasing to £10,680 next year from 6th April.

If I take out a Cash ISA and a Stocks and Shares ISA do they have to be with the same provider?

No. You can have a Cash ISA with your bank or building society AND a Stocks and Shares ISA with a separate investment house.

Is there any risk involved?

More information on the compensation schemes can be found at FSCS - please note you cannot claim on the FSCS if your plan simply falls in value due to poor fund choice or investment market conditions!!!

If you have any comments or questions please let me know in the comments section below.

Remember though – we don’t give financial advice on this site!

Warning – HMRC Tax Refund Email Scam?

shrewdcookie — Tue, 18 Jan 2011 21:34:42 +0000

This evening I received an email purportedly to be from HMRC in respect of a tax refund.

The opening to the email is as follows:

“Dear Applicant

We have reviwed your tax return and our calculations of your last years accounts a tax refund of GBP 178.25 is due.”

You will notice that there are errors in that sentence – “reviwed” is spelt incorrectly and “our calculations of your last years accounts….” is just awful grammar. Surely they have missed out some words.

There was a form attached to the email (no doubt asking for my banking details!) but thankfully Outlook placed the email into the Junk E-mail folder.

HMRC are aware of this scam – see this page on the HMRC site.

It would appear that this phishing scam has been around for quite a while as there is an article by Rob over at the moneywatch blog on this very issue back in 2009.

Please pass this on and don’t fall for it – you could find your bank account emptied very quickly!

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Deposit Guarantee Limit increases to £85,000

shrewdcookie — Sun, 02 Jan 2011 02:57:56 +0000

The Financial Services Authority has confirmed that the compensation limit for depositors will increase from £50,000 to £85,000. This increase in the limit came into effect from 31st December 2010.

This is the Sterling equivalent of the €100,000 compensation limit which comes into force within the European Economic Area (EEA) on the same date.

The new increased limit applies per individual, per authorised firm.

In addition, other areas also addressed included:

Faster payouts – most payouts should be made within 7 days with any outstanding ones made within a maximum of 20 days.
Gross Payout – this ring fences savings of those individuals who also have loans outstanding with the same institution – under current rules any deposit could be offset against liability outstanding before paying out any funds remaining to the individual account holder.

Further information on the recent changes can be found on the FSA website.

UK depositor protection is administered by the FSCS (Financial Services Compensation Scheme).

Although the new increased limit is welcomed it would be a shrewd move for those with large sums on deposit to ensure they hold no more than £85,000 with any one institution.

ISA’s for Children – an introduction

shrewdcookie — Fri, 03 Dec 2010 17:24:04 +0000

The Government has announced that a “Junior ISA” for children will be launched to replace the previous “child trust funds” which have been scrapped.

The new “Junior ISA’s” are likely to come into force in Autumn 2011 and information on them is limited at present.

The new ISA will be a simple and tax-free way for parents to save for a child’s future – the only difference being here that there will be no contribution made from the public purse!

It is understood the ISA will pass to the child on reaching 18 so could be a good way to build a tax-efficient fund for, say, university funding, house purchase or buying a home.

Remember: everyone has a personal income tax allowance – even children. For the 2010-11 tax year it is £6,475 – so if your children currently earn interest on their savings accounts (and their income from all sources if below £6,475) then they can register to receive their savings account interest paid gross with no tax deducted – here’s an article I wrote on this issue previously.

The details are to be confirmed soon but I would expect that a Junior ISA can be rolled over into an “adult” ISA once the child reaches 18 – it’s going to be a case of “use it or lose it”.

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Download Free Yearplanner for 2011

shrewdcookie — Fri, 03 Dec 2010 16:12:14 +0000

Back by popular demand is the 2011 A4 Year Planner.

The 2010 version proved exceptionally popular and I have received many email asking for a new one for 2011.

Download now!

It pays to plan ahead – holidays, work, school holidays, birthdays etc.

To use simply print off as many copies as you like – the 2011 year planner fits nicely on a piece of A4 paper in landscape view.

Please feel free to pass this yearplanner on to friends and family – I am sure they will find it most useful!

p.s. please note that the “thick” lines which appear between the days of the month do not show up when the yearplanner is printed!

Click here to download 2011 Year Planner

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