Money Tips

Unless you already have a relationship with a financial planner, you might never have been asked this question. You might never have considered how it is you actually feel.

Money is emotional

Although money is often seen as a number crunching, rational, exercise, (we all know what we should be doing, on a basic level at least) our relationship with money is an emotional one, full of highs and lows. Have you ever felt down and used a quick spending spree as a ‘pick-you-up’, only to feel guilty for spending the money later?

How we feel about money can also be connected to our upbringing or our own environment, not to mention the wider world and the ‘financial crisis’, the ‘cost of living crisis’, the ‘energy crisis’. It might feel like we’re being fed more negative financial messages than positive ones at the moment.

Depending on how you were brought up, talking about money might feel like a taboo; talking about how much you have is rude and boastful, or maybe you have a sense of abundance but would like to see some evidence. Your money story may be that you should feel guilty for spending a lot of money on something, talking about how much you haven’t got, or asking for financial help, when perhaps your belief is that you should fix it yourself. Even if your own story isn’t negative, it can still be complicated.

Perhaps this generation-old difficult conditioning is why people often find it so hard to talk about money now, even from haggling for a better price, to discussing long-term money plans and wishes with family, both of which can lead to challenging your feelings or your understanding of your finances, for you or your immediate company.

How to talk about money

Just because the discussion might be hard or uncomfortable, it doesn’t pay to ignore the issues at hand. The key is to recognise and use those emotions to face the issue, and take action.

This could mean focusing on your goals and what you need to do to achieve them.

It may simply mean you have little idea what you are spending, even if you feel it’s affordable, and you want a better handle on things. The answer here might be setting out a budgeting and saving plan for your household. There are many budgeting apps and guides available, such as this one from StepChange.

Perhaps you want to put long term savings plans in place for specific goals, such as your children or grandchildren’s University fees or house deposits. You may have already saved efficiently over the years, but you’ve ended up with multiple accounts and you want to feel more in control overall. Do you have questions around arranging your estate more efficiently for the benefit of your heirs? These are all things a financial planner can help you with.

We ask our clients initially, and regularly, “in an ideal world, what would money mean to you?”. The answer usually includes “to not have to worry about it”. The answer isn’t ever in pounds and pence. It’s an emotional outcome.

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Interested in finding out how we can optimise your financial plan and investment strategy? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM.

You can call us on 01869 331469

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

HMRC issue tax codes automatically to your taxable income providers, whether this be an employer or a pension provider. Your code instructs your income provider how much tax to deduct from your pay.

The codes are reviewed each time tax legislation changes, you receive a ‘benefit in kind’ or your entitlement to tax allowances changes.

You’ll be used to seeing them on your payslips, and receiving notifications from HMRC that they have changed your code.

But what do the different codes actually mean?

We’ll summarise the mostly commonly seen tax codes here, however a full list can be found on the HMRC website.

The most common code is 1257L, and applies where the standard Personal Allowance of £12,570 (in 2022/23) is available. It’s used for most people who have only one job.

The letter relates to your situation. For example, L means you have the standard Personal Allowance and M means you’ve received a transfer of 10% of your partner’s Personal Allowance, N showing that you have transferred 10% of your Allowance to your partner.

BR shows that all the income from that source is taxed to Basic Rate, and NT means not taxed. WI, M1 or X shows that you are on emergency tax.

One that we often come across is K. This is referred to as a negative tax code. This shows that you have another source of income that isn’t taxed, and so that tax must be collected from other income through your K code. The number shows the amount of additional income that needs to be taxed, such as the State Pension, this is always paid gross, but is taxable.

For example, let’s say Mrs Smith receives State Pension of £15,570 each year. This is paid without deduction of tax.

Mrs Smith also has a work pension which pays her £4,000 a year. Her tax code here would be K300. This lets her pension provider know that they need to calculate the tax deduction for her work pension, on that pension (£4,000) plus an additional £3,000, so £7,000 in total. This would lead to an effective tax rate of 35% on this pension.

Mrs Smith also has a small annuity from her personal pension, and this has a BR tax code. Her pension provider will deduct Basic Rate tax from the full pension – her Personal Allowance and any adjustments have been taken care of on her State Pension and work pension.

How do I know my tax code is correct?

You can use the HMRC tax code page using your Government Gateway login. You can check the income that HMRC assume you will receive for the current tax year (you can also check the previous year). If you think the information isn’t correct, you can contact HMRC to ask them to update it.

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If you’d like to discuss taxation in context to your wider financial planning, get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM.

You can call us on 01869 331469

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

With rising energy prices putting pressure on households, many are looking at ways to tighten up their budgets to maintain financial stability. Yet have you considered how your tax plan might also aid your efforts? At WMM, our financial planning team in Oxfordshire offers five ideas to help you save on needless tax and free up more disposable income.

#1 Check your tax code

It is estimated that millions of people are on the wrong tax code – often leading HMRC to claim more in tax than is necessary. Some people have managed to claim back £1,000s after being on the wrong code for years. This can happen, for instance, when you change jobs and might be placed on “emergency tax” (which does not grant your Personal Allowance). Check your pay slip to be sure. The most common code for employees is 1257L.

#2 Claim all relevant expenses

For sole traders and those with self-employed income (e.g. a side business), make sure that you keep thorough records of your expenses. Claim everything you are entitled to, since your profits will likely be subject to Income Tax. Did you buy a new computer for your graphic design projects, for instance? What about software subscriptions that you use for work? You may also be entitled to claim travel expenses too.

#3 Raise children with tax-efficient income

New parents know how eye-watering childcare fees are today. The average price of an after school club, for instance, is £62.13 per week (£2,423 a year during term time; i.e. 49 weeks). Moreover, 50 hours of day nursery (for a child under 2) is £263.81 per week. 

Many households feel like they have no choice, therefore, but for one parent to stay at home whilst the other works full-time. However, depending on your circumstances, it may improve your overall household income for both parents to work part-time – with each person doing a day, or two, at home with the kids each week. 

This is partly because both parents can earn up to £12,570 per year, tax-free, under their Personal Allowance. It is more tax-efficient, for instance, if two parents both earn £40,000 between them than if only one person earns £40,000 (where £27,430 is subject to the 20% Basic Rate, leading to a £5,486 tax bill).

#4 Review your dividend-salary balance

If you not only take a salary but also a significant dividend (e.g. company directors), then you might want to check that you are getting the best tax deal from the arrangement. You can earn up to £2,000 in dividends each year, tax-free. After that, the tax rates on dividends are lower compared to income tax bands (8.75% and 20% for the Basic Rate, respectively, and 33.75% and 40% on the Higher Rate, respectively). 

Increasing your dividends and lowering your salary might, therefore, help you save on overall tax and boost your household income. However, bear in mind that dividends are not guaranteed (e.g. if your business has a bad year) and mortgage lenders may not offer you as much if/when you approach them.

#5 Check your council tax

Council tax bills rose 3% on average for most English households earlier in 2022. Many were placed in bands that were too high, leading to claiming back £100s or even £1,000s. However, 100,000s have still not challenged potential banding errors. 

You can check the valuations of your neighbours (and properties like yours) using the government’s VOA website here. From there, you can use free house price websites to check what your home is likely worth. Take care, however, as this process does not only lead to your council tax going down. After a “reassessment”, it could go up! So, make sure you do a thorough check and are confident you have a strong case.

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Interested in finding out how we can optimise your financial plan and investment strategy? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469 

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

It is no secret that costs are rising in 2022. Inflation, at the time of writing, now stands at 6.2%, the highest CPI 12-month inflation rate since 1997, and is very much expected to rise further. Households are understandably seeking greater financial stability. Yet many people do not consider switching key financial products or utility costs, which could help save money. Below, our financial planning team at WMM shares 5 of these to consider in 2022. We hope you find these suggestions helpful.

#1 Broadband

Those who want an ultrafast broadband, phone and TV bundle are likely to pay an average of £79.40 per month in 2022. The average UK spending is £56.99. 

Of course, in today’s world of increasing home working, a fast internet connection is important. Yet many people are paying too much, or for more than they need. You may be able to find deals close to £15-20 per month.

#2 Mobile phone

According to Which?, 40% of customers have stuck with their mobile phone provider for more than 5 years. This has left many people paying more than they should. 

The average UK mobile phone bill is £439 per year (about £36 per month). Yet you could bring this down to nearly £10 with a SIM-only deal, after you have paid off your handset. This means staying with your device rather than upgrading, however.

#3 Mortgage provider

For most homeowners, their mortgage will be their highest monthly expense. With interest rates steadily rising in 2022 to help curb inflation, this is driving up the cost of many mortgages on a variable rate. Getting a fixed deal (e.g. 2-5 years) could help provide some stability.

It may also be possible to save by remortgaging with another lender, which offers a better rate. Those coming to the end of their current fixed deal, therefore, should consider shopping around. This could save you £100s each month.

Of course, remortgaging is a big, personal decision and it may not be right for you (e.g. if you are in negative equity). Bear in mind that you can remortgage at any time, but there may be a charge involved if you end your current fixed-deal early.

A financial planner can help you explore the options and come to an informed decision about the right deal, and timing, for remortgaging.

#4 Credit cards

Ideally, households should aim for no credit card debt at all. Interest rates are high in 2022 – standing at an average 21.46% APR. 

However, if you have ended up with debt, you may be able to move it to a credit card with a lower rate – e.g. 9.9%. There are even deals offering 0% interest for a limited time (e.g. 36 months), which can make it easier to repay the debt if you are disciplined.

#5 Bank accounts

Many people are unhappy with their bank, yet 50% of Britons have never switched providers for their current account. However, doing so could open up opportunities for better overdrafts, more competitive interest rates and higher quality service.

In fact, some banks even offer new customers a “golden handshake” (financial reward) for moving over to them. Switching may seem like a hassle, but it is usually quite easy under the Current Account Switch guarantee.

Invitation

Interested in finding out how we can optimise your financial plan and investment strategy? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469 

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

Scams have always existed, however through the increased use of social media and online accounts scams have become far more common and, often times, harder to spot. 

We’re happy to report that none of our clients have been affected by any of the scams mentioned, however it’s important to remain vigilant. 

In this article, we offer some advice on how to spot a scam and ways to check if it is a genuine offer.

How do the scammers get my information?

Data is widely available for sale, with databases often sold on from all kinds of establishments from phone companies to insurance providers to holiday agents. These databases are available to pretty much anyone who is willing to pay for them. Ticking the “no contact” and “no third parties” options on any forms you complete is a good way of limiting the number of databases you appear on. Also, depending on the scale of the scam, experts are employed to hack into databases and steal the data. And sometimes, it’s just pot luck.

How to spot a scam and avoid it

• You’re likely aware of the scam phone call where someone claims to be from your bank. If you don’t have an account with the quoted bank, then it’s more obvious to spot that it’s likely to be a scam. But eventually they will come across someone who does have that account, and may believe it’s a genuine call from their bank. Here, we would recommend ending the conversation, and ringing your bank directly on the usual customer contact number. Don’t use the number supplied by the caller. If it is a genuine call from your bank, the caller will not mind you ending the conversation. 

• We have personally received similar calls from someone pertaining to be from our broadband supplier, stating there has been unusual activity reported via our router. They then direct you to a website, often a legitimate screen-sharing or file transfer site, the end result being that your activity and passwords can be recorded. The interesting thing about this particular attempt, is that broadband providers rarely, if ever, make such calls. Again, our advice here would be to end the call and ring your provider directly on the usual customer advice number if you are in any doubt.

• Many scams are now sent via email invitations to click a link, which in turn downloads spyware to your computer, which records regular activity and passwords. These can often be harder to spot, as they mask email addresses to look very close to genuine. Here, especially if the email is unexpected, we would recommend closing the email, and logging in directly to your relevant account, without using any links in the email. If the email looks like it’s from a friend, but is only a photo or a link without your usual conversation, try calling them or email them directly in a new email to check. 

We’ve recently been made aware whereby a client of another financial advice company fell foul of an email scam. The client was contacted by email about a new high interest deposit account, suggesting it may be of interest. Of course, in these times, high interest would be very appealing. The ‘senders’ email address had been masked to look very similar to the genuine email address of the client’s actual adviser. This only became clear it was a scam some months later, when the client made a passing comment to their adviser about receiving no paperwork yet. The adviser confirmed not having made such a recommendation or issuing any emails about the account in question. Unfortunately, by this time the client had already ‘deposited’ several large sums into the account, none of which were protected against this type of fraud.

These scams can be harder to spot. We will never contact you about a new investment or account by email, without a prior meeting or phone call with your financial planner. If you’re ever in doubt, or don’t recognise the name of the person calling, then hang up and call us directly on the office number.

In summary, we would always recommend:

• End any unsolicited calls straight away and phone your bank or provider back on their usual customer service number, not a number supplied by the caller.

• Don’t click on any links or files in emails that you’re not absolutely sure of. Log in to your bank or provider portal directly, using your usual app or web address. Do not use the link in the email.

• We will never contact you by email to suggest an investment into a new company or account. If you’re ever in doubt, or don’t recognise the name of the person calling, then hang up and call us directly on the office number.

You can call us on 01869 331469 if you have any concerns.

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

As twinkly lights and festive carols start to take over the high street, it is very easy to give in to the temptation to spend. While it is always worth keeping an eye on the budget, it is equally important to ensure that your purchases are protected as far as possible.

Your Consumer Rights

When buying something, you have certain rights that the retailer is required to uphold. Goods must:

• Be of satisfactory quality
• Be as described
• Be fit for purpose
• Last a reasonable amount of time

If your purchase doesn’t meet these standards, you are entitled to a full refund within 30 days.

For online orders, you can return items for a full refund within 14 days in most cases, even if the item is not faulty and you have simply changed your mind.

Digital content is treated slightly differently, but you should still expect fair and reasonable treatment from the seller.

The rules for buying services are less clear cut, but the Consumer Rights Act dictates that services should be provided:

• With reasonable skill
• Within a reasonable time
• At a reasonable price

Most reputable shops and service providers offer more generous policies. After all, they want their customers to keep coming back.

It is not always as simple as this. Companies fail on a daily basis, sometimes without warning. Sticking with known brands doesn’t always help, as customers of Thomas Cook and BHS will tell you.

And this is before we start to consider criminal activity, such as online scams and identity theft.

Credit Cards

Credit card purchases are covered by Section 75 laws, which means that your credit card company is jointly liable with the retailer.

The following situations would be fully covered under Section 75:

• Most purchases of between £100 and £30,000, for reasons of fault, non-delivery, fraud or company failure.
• Deposits on larger purchases, even if under £100. For example, you could pay a £50 deposit on a £500 sofa, and you would be fully covered even if you used another payment method for the £450 balance.
• In some cases multiple purchases totalling £100 or more are covered, e.g. items purchased as a set.
• Costs arising from the initial problem. If an event is cancelled, you may be able to claim for travel and accommodation costs.
• Store card purchases, where the card is provided by a third party company and not the retailer directly.
• Purchases made at an earlier date with a card that is now expired or cancelled.

Section 75 rules would not cover you in the following circumstances:

• Where the purchase is under £100 or over £30,000. Higher value purchases are covered by different rules which can be relatively complex, and outside the scope of this guide.
• When buying a basket of goods totalling £100 or more. The protection applies to individual items, not the total purchase value. Exceptions may be made where items are purchased as a set.
• Credit agreements that are held directly with the retailer, for example, catalogue accounts.
• Where a third party payment processor is used. PayPal transactions are not covered by Section 75, even if the payment is ultimately made by credit card. PayPal does offer some protection but are not bound by law to do so. Proceed with caution when using other, lesser-known payment processors.

It is usually worth approaching the retailer first, as this can result in a quicker, and more satisfactory resolution. However, you do not have to do this under Section 75 rules, as the credit card company is equally liable.

If your credit card provider won’t help, and you believe you should be covered, you can contact the Financial Ombudsman Service to make a complaint.

Debit Cards

While debit cards do not benefit from Section 75 protections, all is not lost. Visa, Mastercard and American Express are all part of the Chargeback scheme. This not only protects debit card purchases, but also credit card purchases of under £100.

This is a useful failsafe for smaller purchases, but it is not enshrined in law. It is offered by the card issuers at their own discretion.

The circumstances in which Chargeback may be used are similar to the Section 75 rules, and include fault, non-delivery, fraud or company failure.

The key differences between Section 75 rules and Chargeback are:

• Chargeback claims are not protected under the law.
• In most cases, claims must be made within 120 days of purchase or expected delivery. Some exceptions are made. For example, where the claim is for a flight, the 120 days starts on the planned day of departure, rather than the date of booking.
• While Mastercard imposes a minimum claim level of £10, no minimum applies to the other card issuers. Purchases of under £100 are covered.
• Only the value of the actual transaction is covered, not the full purchase if additional payments were made by other means.

To start the claims process, contact your bank and tell them you would like to dispute a transaction under the Chargeback scheme. This may or may not be straightforward, as branch or contact centre staff are not always aware of their own rules. Placing the request in writing, while a little slower, can be more effective at reaching the right person.

There is no statutory timescale by which the refund needs to be processed. Large scale company failures (such as Thomas Cook) can increase the demand on the service and lead to much longer waiting times.

If your bank is unwilling to help, or takes more than 8 weeks to reach a conclusion, you can complain to the Financial Ombudsman Service.

Conclusion

While both credit and debit card purchases are protected to an extent, only credit cards are covered by law. You may also be able to claim for consequential costs arising from the initial problem, and for the whole cost of the item, even if you only used a credit card to pay the deposit.

So if your Christmas shopping involves games consoles, bikes or the complete Harry Potter Lego set, reach for your credit card first.

Debit cards still offer some protection, so are the ideal payment method for stocking fillers, wine and turkey.

If you are still using cash, this might help with your budget, but sadly does not qualify for any level of protection other than the retailer’s usual responsibilities.

Please do not hesitate to contact a member of the team if you would like to find out more.

If you are reading this article about joint finances and have just gotten married, then first of all – congratulations! Money is a hugely important topic in any relationship, and this article aims to help you approach this subject more clearly to find a solution which works for you.

As professional financial advisers here at WMM, we see many clients with a range of financial arrangements and ways of managing money with their spouse or partner. Here is just a brief snapshot of this diversity:

● In one couple, one person (i.e. the breadwinner) might hold the majority of the couple’s bank accounts (in their own name). There might not even be a shared bank account between the two people. The other person (i.e. the home-maker) might not even have their own account, but simply keep money in a purse/wallet, which they can spend and top up from the other person when they need to. This is arguably a more “traditional” model of managing a couple’s finances, and it works for some people.
● On the other side of the spectrum, there are couples where there is no joint bank account at all. Rather, each person has their own account (or set of accounts) in their own name. If this couple lives together, then quite often the bills will be “split” between them. Perhaps one person pays for the mortgage, for instance, whilst the other covers the food and other household bills. This is often labelled a more “millennial” or “modern” approach to couple’s finances, and again, it works for certain couples.

Other couples adopt a “hybrid” approach. Some choose to set up a joint account when they move in together and then shut down their individual accounts when all of their money is merged. Others open a joint account but keep separate bank accounts. In this case, the former could be used to cover the couple’s household bills, whilst the latter can be used for each person’s leisure spending.

So, which model is best? There isn’t a universal answer to this question, but there are certain advantages and disadvantages to merging your finances which you should be aware of. We’ll be covering some of those below. Please note that this content is for information and inspiration purposes only, and should not be taken as financial advice.

Pros of Merging Finances

● A sense of “togetherness”. Bringing yours and your spouse’s/partner’s money together into one account is arguably a good way to show commitment and trust towards one another. It also can create a stronger sense of “being a team” in life together, using your combined resources to solve joint financial problems.
● Even playing field. If there is a wide income disparity between both of you, then bringing your money together can allow both of you to live more comfortably – rather than one of you struggling to keep up with the other.
● Joint liability management. If you live together, then you will share various expenses to do with household costs (e.g. bills, utilities and mortgage). You might also be jointly responsible for children, which brings other expenses. Managing these costs from a joint bank account can simplify paying for these things.
● Easy access during a tragedy. It isn’t nice to think about, but if one person in the couple were to die then having money in a shared account makes it easier for the surviving partner/spouse to access funds which they might urgently need (e.g. to help cover funeral costs).

Cons of Merging Finances

● Separation. Again, this isn’t a nice scenario to think about – but it’s important. Should you and your partner/spouse one day split up, then having all of your money in one joint account can make things difficult. If you do not have your own bank account, then you will need to open one to eventually move money across into it. In some sad cases, one person has withdrawn all of the money out of spite – leaving the other person in a perilous financial position. These dangers can be mitigated somewhat if both people keep an individual bank account with some backup savings in them. In this case, however, it’s important to consider how you want to approach this topic with your spouse/partner due to its sensitivity.
● Financial vulnerability. If you share money with your spouse/partner, then their financial decisions can sometimes have a greater impact on you. For instance, if one person is a big “spender” and the other a “saver”, then this can create tension or arguments as both people watch the other person’s spending behaviour on the joint account.
● Lost independence. When you share an account, then both of you can see every purchase and withdrawal that each person makes. This can create a sense of “losing control” of your personal spending decisions since you might feel that you have to justify your spending more often to the other person.

Final thoughts

On balance, we would argue that for many people it is a good idea to consider opening a joint account once your relationship has reached a high degree of trust and commitment.

It can particularly make sense for lots of couples when they move in together and have to manage shared expenses regularly. In many cases, it can be a good idea for such couples to have a joint account for these purposes, but keep individual accounts for personal and leisure spending.

However, each couple is different in their financial goals and circumstances and it’s important, therefore, to not be too prescriptive. There are indeed cases where it makes little sense for a joint account to be opened, and that’s fine (e.g. certain couples which do not live together).