Debt Management Plans

A Debt Management Plan can be handled by yourself or on your behalf from a Debt Management Company. It can be a great debt solution for a temporary period, or when you can’t manage financially every month. Because a Debt Management Plan is informal, you or your creditors can opt out of the agreement at any stage.

Advantages of Debt Management

A Debt Management Plan is a Informal Arrangement, so you have complete control over it.

There is no need for formal Insolvency Procedures.

You are being pro-active about dealing with your debts, which could prevent further legal action.

You will have a lower more manageable payment every month.

Creditor pressure and harassment will be relieved.

Interest could be frozen.

Self-Help Debt Management

You can administer a Debt Management Plan by yourself and there are certain charitable organisations out there, to help you and show you how to go about this. You renegotiate your payment terms with your creditors showing them that you are struggling to meet payments, By doing this you will mostly find that they are sympathetic about it. The fact that you are dealing with the problem shows that you are committed to repaying the debt. If you leave it until your creditors are threatening some sort of action against you, they will be less sympathetic.

It isn’t easy to set up and maintain your own Debt Management Plan. You’ll need to be a ‘tough cookie’ in order to negotiate the best deal for you; they may in any case refer you to a Debt Management Company. This is discussed in the next paragraph.

Debt Managment Companies

A Debt Management Company is an organisation that negotiates and handles your Debt Management Plan on your behalf. There are so many firms that offer this service and most charge a fee for their service, which will come out of your monthly payment (usually ranging from 15% – 18%).

The good thing about a company handling your Debt Management Plan is they may have more weight when it comes to dealing with your creditors. In some cases, they may even get your interest frozen. They are normally very good at following structured guidelines for your income and expenditure and can normally come up with a reasonable monthly payment that will leave you comfortable to get by every month, whilst paying down your debt. Also, you will make one payment to the company and they will disperse it accordingly, instead of you having to handle all the payments yourself.

How long does a Debt Management Plan last?

The length of time of a Debt Management Plan depends wholly on how much the debt is, what your monthly payments are and how long your circumstances remain the same. You may want to remain in the plan until the debt is cleared, or you may see it as a more temporary measure. You may have little debt to pay off and have a lot of disposable income every month, or you may have higher debt and less disposable income.

If you want to remain in the Debt Management Plan until the debt is paid in full, a rough guide of the duration of the plan can be obtained by dividing your total debt by your new monthly payment amount giving you an approximation of the total number of months it is expected to last.

Property Tips

When we consider which property to buy, there are all sorts of factors about the property itself which influence how much we are willing to pay for it.

Does it have the right number of bedrooms? Are they of a decent size? Is there a garden, and somewhere to park the car? Is there an option to extend the property to add rooms as the family grows?

However, there are just as many external factors to take into account – the old adage of location, location, location really does apply. And it’s incredible just how much of a difference those external factors can make to the property’s value.

1) Good transport links

A new study by Nationwide Building Society has found that London properties situated close to an Underground or National Rail station can see their value jump by a frankly astonishing £20,000.

According to the mutual, homes located within 500 metres of a station will be around 7.2% more expensive than an identical property 1,500 metres from the station, the equivalent of £20,300. Properties found within 750 metres will carry a 5.2% premium, 1,000 metres a 3.4% premium and 1,250 metres a 1.6% premium.

Part of the reason this impact is so pronounced is London’s reliance on trains – more than a third of Londoners (34%) rely on them to get to work every day, compared to just 8% across Great Britain.

However, while trains may not have a massive impact on prices outside of the capital, there are plenty of other factors that do.

2) Good schools

Living near a decent school is a motivating factor for many when they look to buy a home, for the simple reason that they want their children to benefit from a good education. However, schools of a high standard can also add some serious cash to the property’s value.

According to a study last year, again by Nationwide, living near a top-performing primary school – in other words, one which achieved a 100% attainment rate in the most recent SAT exams – could add a whopping £20,000 to the value of a property, compared to the value of identical homes near to schools which finished in the bottom 25% of the SAT results.

Even a good, rather than exceptional, school will add an average of nearly £6,000 to the value of the home, not a sum to be sniffed at.

3) Good neighbours

How much your property is going to be worth can be affected by the people who live on your street.

A study by LV last year found that up to 10% can be knocked off the value of a home if it is located near to a dilapidated property. Just as problematic are noisy neighbours, who can take off an average of £18,000 from your home’s value if they tend to stay up all night playing music.

You should also consider your neighbours – or more accurately their properties – when thinking about ways to add value to your own home.

It’s one thing to add a huge extension to your property, which you reckon will take its value up to £400,000. However, if all the other properties in the street are worth £250,000, this may be a waste of time – how many buyers want to shell out £400,000 to live in a £250,000 street, no matter how nice that extension may be?

4) A good street name

What’s in a name? Well, according to property information site Zoopla.co.uk, the name of the street on which the property is situated can tell us a lot about how much that property is worth.

The site found that properties found on streets with ‘Hill’ in the name are worth an average of £341,666, well over 50% more than the average property price in the UK according to Zoopla’s own Zed Index.

Living on a ‘Lane’ also commands a sizeable premium according to the study, with average prices an incredible £328,378.

Other names making up the top five include Mews (£294,869), Park (£283,069) and Green (£269,861).

In contrast, the cheapest properties are found on roads featuring the name ‘Street’, with an average property price of £155,515 – less than half you can expect to pay to live on a Hill!

Mortgage Deals

Fresh from being granted a reprieve by the Coalition Government – the Tories had wanted to completely do away with the FSA – the UK’s financial regulator is starting to flex its muscles over the mortgage market.

Last week, it unveiled new proposals to clean up the mortgage arena, by clamping down on irresponsible lending and ensuring borrowers only take on mortgages they can afford.

All sounds very sensible, but the proposals have led to warnings that mortgages will become far more expensive, and inaccessible to many.

The new proposals

So what have the FSA actually proposed?

First up is requiring the verification of income on all mortgage applications, bringing to an end self-certification mortgages (though in fairness there haven’t been any self-cert mortgages available for some time).

It will no doubt come as a surprise to many of you that some lenders didn’t check the stated income was correct for all borrowers, but according to the FSA at the end of 2008 a staggering 52% of mortgages went through without the income of the borrower being fully checked. Even today, 43% of mortgages are processed in this fast-track fashion.

The FSA has also suggested there should be extra affordability tests for all mortgages to ensure a borrower is only taking on what they can afford, as well as making the lender ultimately responsible for assessing a borrower’s ability to pay.

So why have such seemingly obvious changes got so many people within the mortgage market so upset?

More expensive mortgages

Lenders and brokers have been falling over themselves to warn that these new rules will make mortgages far more expensive.

Because the new affordability checks are pretty stringent – independent proof of income will be necessary, through company records and tax returns – the lenders will need to spend longer on going through that documentation to check its veracity. And of course, for the lenders to perform these extra checks will cost money.

The critics reckon that those additional costs will be passed onto borrowers in the form of higher interest rates on mortgages.

In other words, we’ll be paying for the lenders to be doing what they should have been doing in the first place.

Mortgages out of reach

What’s more, the new affordability tests may go too far, preventing borrowers from being able to access finance.

The FSA wants lenders to assume borrowers will be taking out their mortgage on a capital repayment basis over a term of 25 years. However, plenty of first-time buyers will actually go for a longer term on their first mortgage, to ensure it is affordable – I know I did. To try to apply a one-size fits all approach to something as individual as whether you can afford that specific mortgage is asking for trouble, in my view.

The Council of Mortgage Lenders, the lender trade body, argues that the FSA’s “proposed conservative approach” may trap struggling households in their existing mortgage, eliminating the possibility of remortgaging to a cheaper deal. That option may be the difference between clawing their way out of their money troubles and retaining ownership of the home, or falling deeper and deeper into arrears until the home is repossessed.

Brokers have also argued that lenders have already ramped up their affordability tests since the onset of the credit crunch, making these changes unnecessary.

Vested interests

Undoubtedly there will be comments from readers on this arguing that of course the lenders and brokers don’t like these changes, as they will make their lives harder. And there is certainly an element of that.

The FSA also does at least seem to have its priorities right in wanting to ensure that lenders act more responsibly, and that borrowers who are tempted to take on more than they can handle, or commit fraud – and there have been plenty who have done just that – are prevented from doing so.

However, I do worry that the critics may have a point.

The number of mortgages being approved through 2010 has been pretty modest as it is, and these new rules will only further dent approval levels. And that is not exactly a good thing – the harder it is to get a mortgage, the more bumps in the road there will be when you’re involved with a chain and trying to move up or down the housing ladder. The whole thing could grind to a halt.

That could put downward pressure on house prices. But then again, you may think that’s a good thing – and long overdue.

The importance of advice

Whether you think the FSA is right or wrong, for me, these changes only serve to reinforce why it is so important to take advantage of the services on offer from mortgage brokers.

By using a mortgage broker, you’ll not only get independent advice on which type of mortgage is best for you, but also on how different lenders are likely to look at your application, as you can guarantee there will still be some variances in how strict the criteria is applied from lender to lender.

Working Family Tax Credits

Are you missing out on money that is rightfully yours or have you forgotten to renew tax credits that you were paid last year? You could be entitled to tax credits if you earn up to £66,000 in certain circumstances. Astonishingly, more than £3.9bn in tax credits went unclaimed last year, according to research by unbiased.co.uk, the professional advice website. With the renewal deadline a week away, those who currently claim their tax credits could find their payments stopped if they do not file renewal forms by July 31. Read on to ensure you are getting what you are entitled to.

WHAT ARE TAX CREDITS AND HOW DO I QUALIFY?

Working tax credit and child tax credit are benefits paid by HM Revenue & Customs.

You can claim the CTC even if you and your partner are working as long as your income is less than £66,000 a year. The amount you get will depend on how many children you have, how old they are and whether they have any disabilities.

The WTC is a payment to top up the earnings of working people on low incomes (typically about £16,000 or less) regardless of whether they have children. Extra amounts are payable if you have a disability, or if you work 30 hours or more a week and have child care costs.

HOW DO I QUALIFY FOR CHILD TAX CREDITS?

You can get CTC if your income is less than £66,000 a year and you are responsible for at least one child aged up to 16, or up to 19 if they are in full-time education or on an approved training course.

The amount of CTC you get will depend on circumstances and your income. You can get it on quite high gross incomes, including incomes of up to £58,000, or £66,000 if the child is under the age of one. If you live with your partner, your incomes will be added together when your claim is assessed.

HOW DO I QUALIFY FOR WORKING TAX CREDITS?

The WTC is complicated, but it comes down to how many hours a week you work and whether your income is ”low enough”. Depending on your income, you may qualify if you work at least 16 hours a week and are either responsible for a child or receiving disability benefits, or if you are over 50 and had been getting certain benefits for at least six months before you started work.

You may also qualify if you are 25 or more and you work 30 hours or more a week and are on a low income. Those over the age of 50 receiving benefits may be able to claim too.

HOW DO I CLAIM IF I LIVE WITH MY PARTNER BUT AM NOT MARRIED?

If you live together, you must make a joint claim. You claim both tax credits on the same form.

WHAT DO I NEED TO DO WITH MY RENEWAL FORMS?

Your renewal pack consists of an Annual Review notice, which provides details of the tax credits you received during the year and your personal circumstances.

If it’s correct you don’t need to do anything.

However, if you receive an Annual Review notice and an Annual Declaration, which asks you to provide details of your income for the tax year that started on April 6 2009 and ended on April 5 2010, you are required to return this by July 31, or your payments may be stopped.

WHAT IF MY CIRCUMSTANCES CHANGE?

If your circumstances change it can affect the amount of money you should be getting and you need to contact the Tax Credit Office.

Some changes need to be reported within one month, such as leaving your job, while for others you must notify the office within three months; for example, when you have a baby.

If you fail to tell the Tax Credit Office about a change straight away, they will not know until the next time you renew your tax credits, usually between April and July the following year. This could mean you have been overpaid; you may have to repay any excess and possibly a penalty of up to £300.

CAN I GET MY CLAIM BACKDATED?

You can normally get CTC and WTC backdated only for a maximum of 93 days before the date you apply. You do not have to explain why you did not claim earlier. You should clearly ask for backdated tax credit on your application form.

WHAT CHANGES TO TAX CREDITS WILL COME INTO EFFECT NEXT YEAR?

The Chancellor announced in his emergency Budget in June that CTCs would be withdrawn for families with a combined income of no more than £30,000, or possibly as low as £25,000 from April 2012. The baby element of the tax credit worth an additional £545 a year will also be abolished. While it is currently possible to backdate claims and certain changes of circumstances by three months, from April 2012 the backdating period will be one month only.

WHERE DO I GO FOR HELP?

If you need to report a change of circumstances or have any questions call the Tax Credit Helpline on 0845 300 3900, or textphone 0845 300 3909 if you have a hearing or speech impairment. Claiming tax credits can be complex, especially if your circumstances are not straightforward.

Debit Cards

How do debit and credit cards compare? Naturally, there will be occasions when it is better to use one rather than the other. Hence, here’s our detailed guide to which plastic is more fantastic!

Almost all plastic cards belong to one of six major payment-card systems, which are operated by American Express, Diners Club, JCB International, Maestro, MasterCard and Visa. These operators process transactions and transmit money through their card networks.

However, credit cards have been around a lot longer than debit cards have. The first major credit card, Barclaycard, was introduced forty years ago in June 1966. However, the UK’s first debit card, the Visa Delta card, using the brand name Connect, was launched by Barclays in 1987.

1. Ease of use

Debit and credit cards have fairly similar formats and appearances; for example, they all measure about 86mm by 54mm, and have a 16-digit number across the middle.

They work in pretty much identical ways, too. When you present your plastic card for payment, the retailer sends data to the bank which processes card transactions on its behalf, known as the merchant acquirer.

This data then passes to the card scheme (such as MasterCard or Visa), which then electronically contacts your card issuer to gain approval for the transaction. The relevant information will then be squirted back down the line, and your card issuer will debit your bank account or credit-card account and pass it down the chain. All this communication takes just a few seconds. Job done!

Most organisations which take debit cards also take credit cards, so we’ll call this round a draw.

½ point to both cards

2. Additional charges

Aha, this is where things get interesting! On some occasions, paying with a credit card can incur additional handling fees and interest, which gives debit cards the edge in these circumstances.

For example, some travel agents and other outlets which process large transactions will add a surcharge of, say, 2% if you pay by credit card. On a £2,500 family holiday, this adds £50 to the bill, so paying by debit card would be the better option. Furthermore, when you buy foreign currency on your credit card, some issuers apply the same charges and sky-high interest rates that they levy on cash withdrawals (see below). The same goes for online gambling and other cash-like transactions, so beware!

Another point to debit cards

3. Withdrawing cash

In 2005 alone, we used our plastic cards to make 2.7 billion cash withdrawals from automated teller machines (also known as ATMs, cash machines, holes in the wall, etc.), plus a further 108 million over-the-counter cash withdrawals.

Debit cards are ideal for drawing cash. Off the top of my head, I don’t know of any which charge fees for cash withdrawals from non-commercial machines or over-the-counter transactions in branches.

Credit cards, on the other hand, should NEVER be used for cash withdrawals! Why not? Simply because credit-card issuers charge withdrawal fees, typically 2.5% of the amount withdrawn, minimum £2.50 — and these fees are creeping up. In addition, most credit cards don’t provide any interest-free period for cash transactions, so you start paying interest at ultra-high cash rates (usually 20% APR or more) from day one. Credit cards and cash machines don’t mix, so don’t let them meet!

Another point to debit cards

4. Fraud and legal protection

If money is fraudulently taken from your current account or credit card account, and you haven’t been negligent with your card and PIN, then you are only liable for the first £50 of any theft and often the bank won’t even apply this excess.

However, if you’ve carelessly revealed your PIN (perhaps by writing it down on a document kept with your card), then you will foot the entire bill — and learn a valuable lesson about information security! On this count, credit cards and debit cards offer a similar level of consumer protection.

However, credit cards have the edge when it comes to paying for goods costing £100 or more, thanks to the valuable legal rights afforded by Section 75 of the Consumer Credit Act. If you order goods or services costing between £100 and £30,000, in the UK or overseas, and pay even a £1 deposit with your credit card, your card issuer stands in the shoes of the supplier if the goods fail to arrive, are damaged or faulty, or are otherwise unfit for their intended purpose. Hence, if you don’t want to lose your money if a supplier goes bust, stick to paying with your credit card for goods costing £100+!

Another point to credit cards

5. Interest-free periods and interest rates

If you always pay off your credit card in full every month, you can enjoy an interest-free period which typically lasts between 45 and 59 days. However, if you don’t, you can expect to pay annual rates of interest which average around 16% a year, but can exceed 30% APR! (To avoid this problem, you can use a 0% on purchases credit card, which offers an introductory interest-period lasting up to a year.)

On the other hand, when you make a purchase using a debit card, the money is debited from your bank account within a day or two, so there’s no effective interest-free period. What’s more, you won’t pay any interest while your current account is in credit — and you could earn more than 5% a year on your credit balances in a Best Buy current account. However, if your spending takes you overdrawn or you exceed any approved overdraft limit, you’ll face a frightening assortment of charges and mega-high interest rates, so stay out of the red if you don’t have prior permission!

Another point to debit cards

6. Cashback, loyalty and rewards schemes

There are dozens of cashback and rewards credit cards to choose from, the best of which pay up to 5% cashback for an introductory period. Personally, I do all of my shopping on my cashback card, as I pay off my entire bill each month by direct debit. You can easily earn hundreds of pounds a year doing this. Result!

Another point to credit cards

7.Credit limits

Finally, we come to the tricky subject of credit limits. With a current account, you can freely spend as much as you have in your account, plus the value of any approved overdraft. Thus, with a £2,000 credit balance and a £1,000 authorised overdraft, you could spend up to £3,000 before penalty charges kick in.

On the other hand, credit cards encourage millions of people to spend money that they don’t have. Indeed, many people see a £10,000 credit limit as a target, and assume that they have been given an extra £10,000 to go mad with in the shops. Bad move! With banks sending out credit-card offers in their millions every week, easy credit could easily become tough debt when times get hard. Hence, I’m awarding the final round to debit cards, not debt cards!

Final point to debit cards

The decision

After nine rounds, here is the judge’s decision: credit (debt) cards have a respectable 2 ½ points, but debit cards win the contest with 4 ½ points. Throw in the fact that most debit cards also double as cheque-guarantee cards, and debit cards win by an even bigger margin.

Tax Rebate

Can you really be sure you’re paying exactly the right amount of tax?

If you don’t know the answer to this question, then this article is for you. I’m going to explain how to check that deductions from your salary are as they should be, and how to claim a tax refund if they’re not.

Check your P60

If you have tax deducted from your earnings, or pension, through the PAYE (pay as you earn) system, you should receive a P60 from your employer, or pension company, every year. This document outlines your income and deductions for the tax year just ended.

If you have more than one source of employment, you should get a P60 from each employer. The same goes for people who have more than one pension.

You should always check your P60s thoroughly to make sure your tax code, and any tax which has been deducted, is correct. For example, if you’re under 65 and eligible for the basic tax-free personal allowance only, your code should be 647L this tax year (before the emergency budget).

This code is made up of the personal allowance divided by ten followed by the letter L. So, the code is 647L because the personal allowance is £6,475. But other tax codes may apply depending on your own circumstances. Visit the HMRC website to help you understand what your code should be.

Don’t underestimate how important this is. After all, HMRC admitted it had sent out thousands of incorrect codes earlier in the year, so it always pays to be vigilant.

Emergency codes

If your employer or pension company hasn’t been informed of your tax code by HMRC, they may have put you on what’s known as an emergency code, which could mean paying more tax than you need to. There are several reasons why an emergency code might apply. For example;

You have started a new job, but didn’t get a P45 from your previous employer.

You have started your first job after the beginning of the tax year, and you haven’t received any taxable state benefits, state pension or a company pension.

You have started a new job but you have had another job(s) or received taxable state benefits during the year.

Your tax code has changed during the year. This could happen if you started to receive company pension benefits or claim the state pension, for example.

You have started a new job but you were previously self-employed.
An emergency code usually ensures you receive the basic personal allowance, and therefore means you will earn some of your income tax-free. But it doesn’t make any provision for other reliefs or allowances you may qualify for. The emergency code is also 647L which is a bit confusing since it’s exactly the same as the code for taxpayers who are entitled to the basic personal allowance only.

That said, the 647L emergency code may also be followed by W1 (week 1) or M1 (month 1) which makes it easier to identify. This part of the code indicates that each week or month is being dealt with separately to give you an equal amount of net pay each time you receive your salary. But this doesn’t take account of any tax you might have paid earlier in the tax year, which could mean you’re paying too much.

If you think you’re paying emergency tax, check with your tax office and ask them to send you and your employer the correct tax coding. This will enable the right amount of tax to be deducted from your salary going forward. This will also give you the chance to claim any overpaid tax from HMRC.

How to claim a refund

Unless you pay your tax bill via self-assessment, there isn’t a specific form you can use to claim a refund if you think you have paid too much tax on your earnings or pension income. That said, if you find you have paid tax on your savings interest even though you’re a non taxpayer, you can reclaim it using form R40. (To ensure you receive gross interest from now on, send form R85 to all the banks and/or building societies you have savings accounts with.)

For a PAYE tax refund, you’ll need to contact HMRC in writing. It’s a good idea to mark your letter with ‘Repayment Claim’ so it can be prioritised.

Your claim should include the following information:

• Your personal details including your name, address, national insurance number and your PAYE reference shown on your pay slips.
• A rundown of your employment history including each of your PAYE reference numbers for different employers (if applicable), the dates when you were employed, your earnings, and the total amount of tax deducted.
• Explain why you think you’re entitled to a refund.
• Enclose copies of your P60s and P45s.
• Provide your bank details. If your refund can be transferred to your bank account it may speed the process up.
• Don’t forget to sign and date your letter.
• Keep a copy of your letter and arrange for proof of posting from the Post office.

In theory, your claim should be resolved within four weeks, but delays can occur particularly if security checks are required before a repayment can be granted. Be prepared to chase HMRC up if necessary. Keep a log of any calls you make to them including the date and time you called and the name of the person you spoke to, plus a summary of the conversation along with any advice you were given by the tax officer. This may come in handy if there’s a dispute over your claim further down the line.

Be aware of the time limits

Finally, you should know that the time limit for reclaiming overpaid tax is due to be cut from from almost six years to just four in 2012. However, for self-assessment taxpayers, the reduction has already taken place. So make sure you don’t miss the opportunity to get your tax back

Early Redemption Fees

With interest rates at historically low levels an increasing number of people are being lured by the attractive loan rates currently available. You can borrow £5,000 for as little as 6.3%. But many of those lucky enough to be in a position to repay their debt early are being charged for doing so. IF estimates that this is costing consumers about £336m a year.

Nearly 75% of personal loans charge early redemption penalties yet many providers are guilty of burying this fact in the small print of the terms and conditions. IF, which does not penalise you for repaying a loan early, is calling for those that do to make their charges more transparent.

Grenville Turner, chief executive at IF, says: “If you think these charges are so reasonable, stop hiding them in the small print and be more upfront with borrowers about the costs of early repayment.”

In addition to the lack of transparency another concerning factor about these redemption penalties is the way in which they are calculated. The Department of Trade and Industry (DTI) recently announced that plans to reform the 30-year old Consumer Credit Act, and this is one of the areas it will focus on.

Most personal loan companies calculate the total amount you pay over the term of a loan using a scheme called Rule 78. This tends to stagger interest unevenly so that in the early stages of the loan a higher proportion of the repayments are made up of interest, leaving you with a larger amount of capital outstanding. Most also calculate redemption penalties in the same way, making it virtually impossible for consumers to understand how an early settlement figure is arrived at. Research from online bank Egg found that the majority of lenders that levy penalties charge about two month’s interest.

Whilst the DTI’s proposals will not ban companies from charging redemption penalties, they will only be able to charge one month’s interest. However, a number of personal loan providers do not levy any fee for repaying your debt early, so if you think you may be in a position to do so it is worth considering taking out one of these loans. In addition to IF and Egg, other companies that offer loans penalty free include Virgin, Cahoot, Nationwide, Woolwich, Barclayloan and Morgan Stanley.

You do need to look at the rate of interest however, as it may still work out cheaper to go for a lower rate even though you will face redemption penalties for paying the debt off early. Check the details of the terms and conditions though as there is no correlation between the rate of interest charged and whether that lender levies redemption penalties. For example, HSBC has an interest rate of 13.9% on a £5,000 standard loan but it also charges those who clear the debt early. Yet, Northern Rock is offering a penalty free loan, the rate for which is only 6.3% if you borrow £5,000.

Council Tax Arrears

What to do if you get behind with payments?

If you have council tax arrears, you will need to contact your local council andmake an arrangement to repay them. You will normally be expected to clear your arrears within the current financial year, which ends on 31 March. If you can’t afford this, work out what you can afford and tell the council.

You may beable to arrange a longer repayment period if you are on a low income or havespecial circumstances, for example, if you have a short term drop in yourincome due to illness. You will need to pay an amount off the arrears on top ofyour usual monthly council tax payment.

Check your council tax bill is right

Depending on your situation, you may be entitled to a discount or reductionin your council tax bill. If you live alone or are the only person responsible forthe council tax, you should get a discount.

You may be able to claim Second Adult Rebate if you have to pay counciltax and you live with someone else, other than your partner. The other personmust be 18 or over, not paying rent, not responsible to pay council tax, andhave income below a certain amount. If your own income is below a certainlevel, you may be entitled to Council Tax Benefit instead. When you claim,the council should work out which benefit will give you the most help with yourcouncil tax. You can get a claim form for Council Tax Benefit and SecondAdult Rebate from your council.

If you, or someone living with you, has a disability, you may be able to gethelp to reduce your council tax bill bill.

If you are a full-time carer or someone in your home has severe mentalimpairment, you may get a discount. Severe mental impairment can includethings like Alzheimer’s disease and serious learning disabilities.

If your home has been adapted for a person with a disability, you may be ableto get a disability reduction. The person with the disability can be anyoneliving in your home. It doesn’t have to be the person paying the council tax.

Ask your council for an application form for a discount for a carer or personwith severe mental impairment, or a disability reduction. You can ask for all ofthese if they apply to your situation.

What happens if you don’t pay

If you fail to pay off your council tax arrears, or to reach an agreement with thecouncil, your council can apply to the local magistrates’ court for a liabilityorder. This is a court order which says that you must pay the whole amount ofcouncil tax owed for that year, not just the arrears. The liability order allowsthe council to take action against you to make you pay.

If you owe the council tax jointly with someone else, the council can still askyou to pay the whole amount back.

You will be sent a summons. This is a court document telling you how muchthe council says you owe and the date and time of the hearing where thecourt will consider whether to make the liability order. The council can addcosts to the amount you owe to pay for the liability order.

You should contact the council and try to make arrangements to pay off thedebt before the hearing. You won’t be able to do this at the hearing itself. Thecouncil might agree to let you pay off the debt in instalments, if you can’tafford to pay it all straight away. If you do make an agreement to pay, thecouncil may be willing to cancel the summons or to cancel (waive) the courtcosts, provided you keep to the arrangement.

If you don’t agree you owe the council tax, for example because you’ve beencharged for a period when you no longer lived at that address, tell the councilstraight away. If they agree, they can stop the court action. If they don’t agreeor you can’t contact the council, you will need to go to the court hearing at thetime shown on the summons.

What happens at the liability order hearing

At the liability order hearing, the magistrates will decide whether you are theperson responsible for paying the council tax and make a liability order.

If you agree that you are responsible for paying the council tax, you don’tneed to go to the hearing.

If you don’t agree that you’re responsible, you should go to the hearing and tryand prove this to the court. You will need to bring proof with you, for examplea bill showing your name and real address. If the magistrates agree that youdon’t owe the council tax, they will not make a liability order.

If a liability order, is made, the council can:

• ask the Department for Work and Pensions (DWP) to makedeductions from your benefit, or
• instruct your employer to make deductions from your wages(attachment of earnings order), or
• send bailiffs to your home to seize your belongings. In somecircumstances, bailiffs can use reasonable force to get into your homeand seize goods, or
• make you bankrupt (if you owe £750 or more), or
• apply for a charging order (if you owe £1000 or more). A charging order gives the council powers to force you to sell your property andpay off the council tax debt out of any money left after the mortgagehas been repaid. This doesn’t happen very often. Get advice if it happens to you.

If none of these things have worked, the council can apply to the magistrates’court for a warrant to send you to prison (a committal warrant). The council will do this if it believes you’ve got the money to pay but are deliberately with holding it, or aren’t making an effort to pay.

You will be sent another summons, called a committal summons. This time,you should go to the court hearing. If you don’t, you could be arrested. If you can’t attend the court hearing for any reason, contact the council and arrange another time for the hearing. Try to come to an arrangement with the council that you can afford beforehand, if you can. The council can add further costs to your debt, to pay for the court summons and hearing.

What happens at the committal hearing

At the committal hearing, the magistrates must look in detail at your financialsituation to see if you can pay. This is called a means enquiry. Tell themagistrates about any special reasons why you haven’t been able to pay, forexample, a drop in your income or changes within your family. This will helpthem to decide what order to make. If you are in financial hardship or cannot pay for other reasons, you can ask the magistrates to write off (remit) all or part of the debt.

If the council can show you have refused or not made an effort to pay, the magistrates could send you to prison. Usually though, they will make an orderpostponing the warrant to send you to prison, as long as you pay off the debtby regular instalments.

You can ask someone to go with you to the court hearing if you need help toexplain your situation. The court doesn’t have to let the other person speak onyour behalf, unless they are a solicitor. You may qualify for help to pay for asolicitor under Legal Aid, or the court may have a duty solicitor you can speak to when you get there.

After the committal order has been made

After the committal hearing, make sure you understand what you must payand when the payments are due. If you are not sure, ask the council officer to explain. You must stick to the payments until all the money is paid off. If yourcircumstances change or you are unable to pay for any reason, contact thecouncil straight away and make another arrangement. Otherwise, they mayhave you arrested and brought back to the court to say why you haven’t paid.

Tipping Etiquette

It’s a question many of us ask ourselves while on holiday. How much should I tip? It can be tricky, and, if you’re not careful, you could end up either embarrassing yourself or causing offence to another party. So, what’s the correct number? 10%? 15%? 18%? And what if service is included? How much should you tip then?

Tipping in some countries will cause just as much offence as not tipping in others. So, in an effort to make things clearer, and with a little help from my friends (and the odd Lonely Planet guide), here are some tips I’ve discovered on holiday that should make your trip a little smoother:

Australia and New Zealand

Tipping is not widely expected, and may even cause offence to some. However, tipping in restaurants is becoming more common, and a 10% tip for good service will be appreciated by restaurant and bar staff. Taxi drivers and hairdressers do not expect a tip.

Egypt

One of the first words I learnt when I went to Egypt was ‘baksheesh’. Literally meaning ‘spread the wealth’, this is Egypt’s monetary way of saying thank you for services rendered. Tipping is discretionary, but a couple of Egyptian pounds (one Egyptian pound is roughly 10p) here and there goes a long way. Porters, tour guides and waiters all appreciate baksheesh, and whether it’s for a meal or for someone carrying all those purchases you made in the souk back to the hotel, every penny counts. Remember to carry change and ask for small denominations when changing your money. Small bills are a prized possession in Egypt because, obviously, no one gives change for a tip. One exception is taxi drivers, who, as my Egyptian friend says, are usually rude anyway, and will probably try to rip you off. So, needless to say, don’t tip them.

France

Service is included by law in France, and your bill may state ’service compris’ to indicate this. In any case, it is polite to round up the bill to the nearest euro, or to add 10% for exceptional service. Taxi drivers and porters will always appreciate a couple of euros for efficient service. However, watch for signs that say ‘Pourboire Interdit’, which means that tipping is forbidden.

Greece

In Greece, although a service charge is automatically included in your bill when eating out, this does not necessarily mean that it will go to the waiters and waitresses. So, if you’re satisfied with your meal, a tip of 8-10% is customary. Bear in mind that during the Christmas and Greek Easter holiday periods a service ‘bonus’ of 18% will be added to your restaurant bill as a holiday extra for the waiters. When travelling around, rounding up your taxi fare to the nearest euro is also the norm.

Germany

Although a service charge is included (appearing on your bill as ‘Bedienung’), it is the norm to tip up to an extra 10% of the bill, especially in upmarket restaurants. One word of advice: never say ‘danke’ when paying unless you are really appreciative of your meal, because more often than not, this will be interpreted by the staff as a signal to keep the change. In addition, hand your tips to the staff when paying the bill instead of placing it on the table as you leave. A customary practice in the UK to save awkwardness perhaps, but this will cause offence in Germany. In taxis, add a euro or two to the total to keep the cabbie smiling.

Italy

When dining in restaurants, a 10-15% service charge (coperto) may already be included in your bill. If that is the case, don’t feel obliged to add any more, and if not, a 10% gratuity is sufficient. In many Italian cafés, you will often pay more to sit down and enjoy your coffee, hot chocolate or gelato rather than standing at the bar anyway. So, if you do sit down, an extra €0.50 is a sufficient tip. (You won’t find better hot chocolate than in Italy, but that’s another story.) Smaller trattorias and pizzerias don’t expect a gratuity, and tipping a small family-run business may even cause offence. Taxi drivers also do not expect a tip. When I attempted to leave one in Florence, my friend practically slapped the coins out of my hand. Again, however, rounding up to the nearest euro is fine, or if your cab driver helps carry your bags you may want to extend this to a couple of euros.

Japan

One word. Don’t. The Japanese are pretty clear cut when it comes to tips. Any monies left are more likely to cause offence than gratitude. The number stated on the bill is what you should pay. No more. No less. ‘Nuff said.

Spain

Service charges are included in the food prices on the menu in Spain, and tipping is a matter of personal choice. Most people leave some small change if they’re satisfied and 5% is usually plenty. It’s common to leave small change at the bar and café tables, or if you eat tapas or sandwiches at a bar, it’s just enough to round the bill to the nearest euro.

USA

Tipping is serious business in the States. Many service staff get no more than minimum wage, and rely on tips to supplement their income. One of my colleagues (whose name shall remain anonymous) was actually chased out of a diner because they didn’t leave a big enough tip when eating. So, tip generously, and often. You should leave a 15% minimum tip in diners, restaurants and cafes, and if service is really good then 20% is more the norm. In bars, slipping the bartender around a dollar per drink will ensure that service will never be a problem. And finally, when out and about in the States, tipping an extra 15% to your taxi driver is the usual custom.

I can’t afford to tip

Almost a third of Brits have reduced their tips because of the recession, so you’re not alone if you’re feeling the pinch. But savvy travellers know that tipping hotel staff at the start of a holiday often means you get a better service for the duration of your stay. And a better service means a better holiday. If you’re going somewhere you will have access to the internet, one way to make sure your holiday is affordable is to use online banking to keep track of your transactions. Finally, don’t forget to adopt our goal: Have a cheap holiday. It really can help you to save those pennies!

Benefits Help For Sick & Disabled People

What help is available

If you are sick or disabled, there are a number of different benefits and tax credits you may be able to claim.

• If you have care needs or problems with getting around, you may be able to claim Disability Living Allowance or Attendance Allowance

• If you are unable to work, you may be able to claim Statutory Sick Pay or Employment and Support Allowance

• If you work, you may be entitled to Working Tax Credit

• If you were injured at work or have an industrial disease caused by work, you may get benefits

• If you were injured serving in the Armed Forces, you may get benefits

• If you care for someone who is disabled, you may be able to claim Carer’s Allowance

Remember that you may be able to get other benefits as well, depending on your circumstances. You may be able to get benefits for being on a low income like Housing Benefit and Council Tax Benefit, or benefits because you have children.

Even if you cannot claim any benefits, you may be able to get national insurance credits if you are unable to work or you are a carer.

If you are disabled, information about benefits and tax credits must be available in a way that is accessible to you. For example, information must be available in large print or in Braille.

Also, if you are disabled, you may be entitled to other help apart from benefits and tax credits. For example, you might get cheaper public transport, parking concessions and practical help with care from your local council. You also have the right not to be discriminated against at work or when you receive goods or services.

For more information about your rights if you’re disabled, you should get in touch with your local authority or consult an experienced adviser.

Working Tax Credit

You may be able to claim Working Tax Credit if you are disabled and work at least 16 hours a week. Working Tax Credit is paid by the HM Revenue and Customs, and depends on your income. It is paid in addition to benefits for the extra costs of disability such as Disability Living Allowance. However, Working Tax Credit may affect other income related benefits you get, for example, Housing Benefit and Council Tax Benefit.

Benefits for people who cannot work

If you cannot work because you are sick or disabled, whether temporarily or permanently, you may be able to claim Statutory Sick Pay (SSP) or Employment and Support Allowance (ESA). Usually, SSP is paid for the first 28 weeks of sickness if you work for an employer. Otherwise, you should claim ESA. Some people get Incapacity Benefit or Severe Disablement Allowance, but you cannot usually make a new claim for these benefits. This is because they have been abolished for new claims unless the claim can be linked to an earlier period of entitlement.

In some cases, you can get Income Support on top of SSP, depending on your circumstances and income.

SSP and ESA are intended to provide an income in place of your earnings when you cannot work. If you are able to do some work, you will not usually be able to claim these benefits. However, you may be able to do some work if your earnings are not more than a set limit. You can also do voluntary work or approved work on an unpaid trial basis. You must get the agreement of the Department for Work and Pensions for any work you do when you are getting these benefits.

If you want to do any work while claiming benefit because you have limited capacity for work, you should consult an experienced adviser.

Statutory Sick Pay

Your employer pays Statutory Sick Pay (SSP) for the first 28 weeks that you are off sick. It is treated like earnings for the purposes of income tax and forms part of your taxable income.

Who can get Statutory Sick Pay

To get Statutory Sick Pay (SSP), you must be unable to work because you are sick or disabled. You must earn at least £97 a week. If you don’t earn this amount, or if you’re self-employed, you cannot get SSP. You should claim Employment and Support Allowance (ESA). instead.

Part-time workers, workers on a fixed-term contract and agency workers all qualify for SSP.

If you were getting ESA within the last twelve weeks, you do not get SSP. Your employer should tell you if you are not entitled to SSP by giving you form SSP1, or their own version of it. You can then reclaim ESA instead.

If you are off sick and you are not sure whether you can get Statutory Sick Pay, you should consult an experienced adviser, for example, at a Citizens’ Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

How much is Statutory Sick Pay

Statutory Sick Pay (SSP) is paid at a fixed rate of £79.15 a week. If you get contractual sick pay you may get more sick pay than this but it will depend on what your contract of employment says.

Employment and Support Allowance

Employment and Support Allowance (ESA) is for people who:

• can’t work because of sickness or disability, and

• aren’t getting Statutory Sick Pay.

There are two types of ESA:

• contributory ESA, which you can get if you have paid enough national insurance contributions

• income-related ESA which is paid if your income and capital are low enough.

You may be able to get both contributory ESA and income-related ESA, depending on your circumstances. For both types of ESA, you will usually have to have various tests to confirm that you have limited capability for work.

You can’t get ESA if you or your partner are getting Income Support, income-based Jobseeker’s Allowance or Pension Credit. You have to be ordinarily resident in the UK. For income-related ESA, you must not have any immigration controls on your stay here that would stop you getting the benefit.

For most new claims, ESA replaces Incapacity Benefit and also Income Support for people getting it because they can’t work due to sickness or disability. If you are already getting Incapacity Benefit or Income Support because of sickness or disability, you can carry on getting it and you do not have to claim ESA.

ESA is paid by the Department for Work and Pensions (DWP) and, in Northern Ireland, by the Social Security Agency.

Incapacity Benefit

You can’t normally make a new claim for Incapacity Benefit after 27 October 2008. You will normally have to claim Employment and Support Allowance instead. However, in some unusual circumstances you might still be able to make a new claim for Incapacity Benefit after 27 October 2008. The normal conditions for claiming Incapacity Benefit would still apply. One example of where you might be able to make a claim for Incapacity Benefit after 27 October 2008 is if your new claim can be linked to an earlier period of eligibility for Incapacity Benefit. Another example is:

• you are now getting Income Support because, for example, you are incapable of work, and

• you did not meet the national insurance contribution conditions for Incapacity Benefit, and

• it turns out that you did have enough contributions for Incapacity Benefit after all.

If you have limited capability for work and you would previously have claimed Incapacity Benefit, you may now be able to claim Employment and Support Allowance instead.

Incapacity Benefit is paid at different rates, depending on how long someone has been getting it. Lower rate short-term Incapacity Benefit is paid for the first 196 days off sick and is not taxable. Higher rate short-term Incapacity Benefit is paid for the next six months and long-term Incapacity Benefit is paid after a year. You can get extra money if you have dependants.

You may get less than the full rate of Incapacity Benefit if you are getting an occupational or personal pension or money from an insurance policy for physical or mental illness. If you carry on getting Incapacity Benefit once you reach state pension age, the rate you get may also be reduced.

Both higher rate short-term Incapacity Benefit and long-term Incapacity Benefit are taxable.

Getting Incapacity Benefit backdated

If you were entitled to Incapacity Benefit before you made your claim, you may be able to get benefit for an earlier period. This is called backdating. Incapacity Benefit can be backdated for up to three months before the date of your claim, and you do not have to give a reason. You should explain on the claim form that you want to claim backdated benefit and give the date you became entitled to Incapacity Benefit. You can make a backdated claim for Incapacity Benefit as long as you meet the other conditions.

How is Incapacity Benefit paid

Incapacity Benefit is usually paid directly into a bank or building society account. If you cannot open an account or you have difficulties with this method of payment you should let the office know. It is possible to pay the benefit by cheque in some circumstances.

Incapacity Benefit, change of circumstances and fraud

You may commit a benefit fraud if you give incorrect or misleading information, or fail to report a change of circumstances, that could affect your Incapacity Benefit. Even if you are not committing fraud, you can cause an overpayment, that will have to be repaid. Your circumstances can be checked at any time while you are claiming. Benefit fraud is a criminal offence and you can be prosecuted or asked to pay a penalty. If you are being investigated for benefit fraud, your benefit will be suspended. If you are convicted of benefit fraud more than once, your benefit can be reduced or stopped in the future.

If you are worried about whether you might be suspected of fraud, you are under investigation or you have been convicted, or if you have been asked to repay an overpayment of benefit, you should consult an experienced adviser.

Discrimination

It’s against the law for you to be treated unfairly because of your race, sex, disability, sexuality or religion when the Jobcentre or benefits office deals with your claim for Incapacity Benefit. Also the Department for Work and Pensions (DWP), which pays Incapacity Benefit, has a policy which says they will not discriminate against you for other reasons. For example, it says they will not discriminate against you if have caring responsibilities. If you feel that you’ve been discriminated against, you can make a complaint.

Severe Disablement Allowance

You cannot get Severe Disablement Allowance (SDA) if you are making a new claim because this benefit was abolished in April 2001. If you are already getting Severe Disablement Allowance, you can carry on getting it.

If you are incapable of work and you would previously have claimed SDA, you may be able to get Employment and Support Allowance (ESA).

SDA is not taxable. You can get it as long as you are incapable of work and if you go into hospital.

If you are aged 18 or over and under 60, and you are making a repeat claim for SDA, you will become part of the Pathways to Work scheme and will have to attend monthly interviews aimed at helping you get back to work. You may be entitled to Return to Work Credit.

If you’re currently getting SDA, you can volunteer to take part in the Pathways to Work scheme.

If you receive SDA or used to receive it and need information or help, you should consult an experienced adviser.

Benefits for the extra costs of disability

Disability Living Allowance (DLA) and Attendance Allowance (AA) are benefits to help you pay for personal care and the costs of getting around. However, it does not matter what you use the money for. DLA is for people who claim it before the age of 65 and AA is for people who claim it at the age of 65 or over.

You can get DLA and AA whether or not you are working, and they are not affected by any work you do. The benefits do not reduce any income-related benefits you get and may even increase the amount you can claim.

Remember that you may also be able to claim benefits because you cannot work – see under Benefits for people who cannot work, and means-tested benefits if you are on a low income. If you work, you may be able to claim Working Tax Credit.

What is Disability Living Allowance

Disability Living Allowance (DLA) is a benefit for disabled people under 65. To get DLA, you must have personal care needs or difficulty with walking (also called mobility) because of either a physical or mental disability. DLA has two parts, the care component and the mobility component. The care component is paid at three rates depending on how often and how much you need care. The mobility component is paid at two rates, depending on how much difficulty you have with walking. Depending on your needs, you may get one component of DLA, or both together.

Who can get Disability Living Allowance

You can get Disability Living Allowance (DLA) if:

• you claim before you are 65, and

• you have had care needs or mobility needs for at least three months, and

• you are likely to have these needs for at least another six months.

If you are already getting DLA when you reach 65, you can continue to get it as long as you still have care or mobility needs.

If you are terminally ill and not expected to live for more than another six months, there are special rules for claiming DLA.

There are also special rules for children under the age of 16.

You will not be able to get DLA if you are living permanently in a hospital or in a care home and your local council is helping you with your fees.

To get DLA, you must have lived in the UK for six months in the last year. However, this rule doesn’t apply to people who are terminally ill. You must be living in the UK when you make a claim for DLA and the UK must be your normal place of residence. You must not have any immigration controls on your stay here that would stop you getting the benefit.

It may be possible to carrying on getting the care component of DLA if you move to another EEA country or Switzerland. You may also be able to claim for the first time if you’re living in one of these countries.

You can get DLA whether or not you work. It isn’t usually affected by any savings or income you may have.

If you are terminally ill

If you have a progressive disease and are not reasonably expected to live for more than another six months, there are special rules about claiming DLA.

If you are applying for either the care component or the mobility component, you don’t have to wait until you have needed help for three months. You will always be entitled to the highest rate of each component.

You don’t have to wait until you have lived in the UK for six months before you can make a claim.

You can get the care component for a child of any age – you don’t have to wait until they are three months old.

Care needs

You have care needs if:

• you need help with things like eating, washing, getting dressed, going to the toilet or communicating your needs

• you need someone to supervise you to stop you being a danger to yourself or others

• you need someone with you when you are on dialysis. You must need to have dialysis at least twice a week. If you’re an out-patient, you will only get DLA if no member of the hospital staff helps you with or supervises the treatment

• you need someone with you to help you lead a normal social life.
You do not actually have to be getting help for your care needs to qualify for DLA. As long as you have a care need, it does not matter whether you are actually getting care.

The care component of Disability Living Allowance (DLA) is paid at three different rates. You get the lower rate if you need help with cooking a main meal or care for a significant part of the day. You get the middle rate if you need frequent care throughout the day or night, or continual supervision throughout the day or night. You can also get the middle rate if you need someone with you while you’re on dialysis. You get the higher rate if you need frequent care or supervision throughout the day and night, or if you are terminally ill.