Monthly Archives: July 2013

ISAs are simple. Once the money is in there is no further tax to pay on it. There are no forms to fill or tax to reclaim. You can also withdraw your money whenever you like without paying any further tax.

Pensions just don’t come close. The real problem is uncertainty Any government can arbitrarily change the rules and move goalposts making many of the positives negative. Paying into a pension doesn’t avoid paying tax on your contributions, you just defer the day. When you take income from your pension, through either drawdown or an annuity you will be taxed on the income will be taxed on the income.  At present you can take a pension once you reach 55. There are no guarantees the age will not be raised again as it was from 50 to 55.

Currently you can take up to 25% of your pension pot as a tax-free lump sum – a great incentive, especially as you approach 55. But will this still be possible in 5 or 10 years? No one knows. Politicians are already giving consideration to limiting the amoun, perhaps capping it at £36,000.

Then there is the tax relief on contributions, again under review. Pension contribution tax relief deprives the treasury of around £35bn a year. It is suggesting that relief could be limited to 30% rather than the highest 40% as currently.

Finally, you are compelled to buy an annuity or drawdown. In most cases you would need to survive for 20 years just to get your pension pot repaid to you. Not surprisingly, annuity providers make huge profits on pension annuities. Standard Life for example has disclosed their profit margin is 18.6%. This is in addition to the fees charged over the years you build up your pension, taking a large slice of the growth in the form of their annual charges.

ISAs may not be 100% safe from a raid by the taxman. But as around 23 million people have one and will protest at any attempt to confiscate any of it, they are a lot safer than pension.

Ask anyone that saved into an Equitable Life pension!

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Moving house can be a tricky business: there’s a lot to think about. When you’re moving into a brand new home, there can be other things to think about too. That’s why Debt Advisory Centre has put these tips together to help you set up your utility bills in your new-build home and make sure everything goes smoothly.

Before you leave your old home

The process of setting up your utilities in your new home actually starts in your old one. Here’s what you’ll need to do before you move out:

• Let your utility suppliers know that you’re moving.
• Make sure they have the address of your new place. If your supplier doesn’t recognise your new address or postcode, refer to the information below.
• Take meter readings on the day you move out and send them to your suppliers. Keep a record of this.

In your new-build home

Setting up utility bills in a new-build home can be different than when you move into a second-hand home. Firstly, new homes are generally built to higher energy efficiency standards, which should mean you should spend less on your utilities. 

If your home is brand new, there is a chance that businesses like energy suppliers, insurers and retailers might not recognise your postcode – and this may make it difficult to switch your energy supply. If this is the case, you will need to contact the house builder’s sales advisor. You should ask Royal Mail for your new postcode to be put on their database (which most large companies use for reference). You may need to fill out the ‘Postcode Finder Address Enquiry Form’ on the Royal Mail’s website. It is best to check whether your new postcode is registered before you move in, so everything is set up for when you get there. 

Once your postcode is registered, you can look for the best deals on gas and electricity. It’s best to ask the house builder which company they use initially as this provider may have the best deals anyway.　

What to do if you’re struggling with your energy bills

Whether you’ve recently moved to a new home, you’re considering it, or you’re staying in your current home – it’s important to know what to do if you start struggling with your utility bills. 

Recent research from debt management provider Debt Advisory Centre shows that around four million adults in the UK are in arrears to their gas, electricity or water provider. And the research suggests that 13 million have ignored a utility bill because they couldn’t afford to pay it at the time. 

Here is what you should do if you’re falling behind on your utility bills:

• Contact your provider. Tell them about your situation and what you can currently afford to pay towards your arrears. They should do their best to reach an arrangement that suits both of you. 
• Carry on paying for your usage. If you don’t do this, your utility provider could take action like installing a prepayment meter – or your water company could take out a County Court Judgment against you.
•  Consider a prepayment meter for gas or electricity. It can be more expensive than paying by Direct Debit, but contact from your provider will stop because you’ll be paying for all the energy you use ‘as you go’. Your arrears can be loaded onto the meter and you can pay these off more gradually too.  

If all else fails, get professional debt advice. This could help you to get on top of your utility arrears – as well as any other debts you may have, like credit cards and loans.

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