As accountants we are often asked, and expected to know, numerous ways of saving money, both in physical terms such as accumulating cash or reduce outgoings to maximise wealth retention.
- The five pound piggy bank
This is a great idea that I found on www.pinterest.com (an social pinboard board site). The idea works like this. Every time you come into possession of a five pound note, usually as change from another purchase, you save it and put it into your piggy bank. Some savers have an envelope in their wallet or purse, and then every time you reach £50 put it into a high yield savings or bond account. This would be a great way to save for Christmas presents, especially if you start now, or you can use it for just about any other purpose.
- Minimise your mortgage interest
The most expensive item you are ever likely to buy is your home. If you’re not in the privileged position to pay cash, make sure the loan you use to finance it is the best available to you. For example, if you are paying the lenders Standard Variable Rate (SVR) then you are probably paying hundreds, if not thousands of pounds a year more then you need to. The Bank of England rate, the rate at which banks may borrow money, is the lowest it has been for the last 25 years or more and, if you agree with us, it is set to stay there for a while longer too. Consider fixing your loan at a rate which tracks the base rate or for a fixed term say, 2 or 5 years. The savings you make can be staggering. For example, if you borrow £100,000 at 6% over 25 years, you may pay it back at £643 per month, with a total charge for credit (interest) of £93,000. But, if you can overpay by just £100 per month you will clear the loan in less than 19 years, giving you 6 years of mortgage-free living AND saving you an incredible £25,000 in interest, worth considering right?
- Credit card debt
One of the golden rules of financial planning is to clear the most expensive debts first. If you cannot clear the balance each month then the annual interest rate on credit, and particularly store cards can run to a staggering 30%. Many lenders are offering extensive 0% interest periods so consider transferring your credit card debt to one of these deals initially. At the very least consider a low(er) cost loan to pay off your credit card debts. Alternatively, leave the credit card at home. My wife has just tried this for the past month and was overjoyed with the savings she made, made me smile too!
- Cancel your gym membership
If you pay £50 a month and use the gym three times or more per week then fine, but if you are not then cancel your membership immediately. You will soon have enough to buy your own bike, and if you’re so inclined your own rowing machine. Now that we are coming out of the winter months and the cold weather is easing you might wish to consider running from work to home three times a week, its absolutely free! Or, you might wish to purchase a bicycle using the governments cycle to work scheme
www.cyclescheme.co.uk. You may deduct the cost (and safety accessories) of the bike from your gross salary, a significant saving, plus cycling to work is one of the best and fastest ways to lose weight. So, shape up for the Summer!
- Ensure your taxes and filings are up to date
It wouldn’t be a blog from accountants if there was not some mention of taxes and Returns, especially at this time of year. If you have not already filed your 2013 Tax Return then do so immediately. The penalties now for failure to submit are punitive to say the least. You already have a mandatory £100 penalty, whether you owe tax or not. If your Tax Return remains outstanding at 30 April this year then the penalties rise to £10 per day, something which I am sure everyone would seek to avoid. If you owe any tax for the year 2012, this was payable no later than 31 January 2014, otherwise interest will then become charged on any amounts unpaid. After 28 February 2014 any unpaid tax will also attract a 5% surcharge.
If you have not filed your 2013 Tax Return then please contact me now so we may avoid the penalties, interest and surcharges HMRC will undoubtedly apply.
Tony Mann – Manager
Westbury Accountants and Business Advisors is an accountancy practice based in London. Westbury have been providing Accounting and Tax solutions to small and medium sized businesses since 1936. Talk to the team at Westbury on 0207 253 7272; or visit http://www.westbury.co.uk.