Articles by Frugaling

3 perks to consider to reduce your car costs

Of all the prices you pay during your lifetime, the price of a car can easily be among the highest. Therefore, when the time does come to purchase a new vehicle, you should tread carefully at every stage of the browsing and shopping process to see where savings can be made. You could be surprised by just how much is trimmed off the total price provided that you are seriously determined. Below, we detail three perks that you could find especially cost-effective.

A company car

Initially, receiving a car from your employer can seem a wonderful perk. You get a vehicle that you don’t need to make any initial financial outlay for and, in the United Kingdom, there’s even a great tax break for the car user, as Auto Express explains. However, the company car on offer in your case might not be as financially efficient as it first looks – not least for tax reasons.

The UK tax-collecting authority Her Majesty’s Revenue and Customs – or HMRC – will treat that car as a benefit-in-kind and so tax it at a rate they deem accurately reflects the car’s value. HMRC consider a company car part of the user’s earned income, as the employer effectively pays for it in addition to an annual salary. How much company car tax you have to pay will be affected by the vehicle’s carbon dioxide emissions and your annual salary.

Therefore, as Tax Donut notes, you might actually want to turn down a company car if its emissions are high and a higher salary is on offer as an alternative. When you choose that alternative, the extra money could help you to purchase a low-emissions car for use in place of a company car. This brings us nicely onto the subject of how you can help yourself to make a wise choice of eco-friendly vehicle.

An environmentally friendly car

Another good reason to buy a low-emissions car instead of accepting a less planet-friendly company one is that this could appreciably lower how much you have to pay in VED. This is more properly known as Vehicle Excise Duty and must be paid on any car, even if it is a company one.

VED is payable on the vast majority of new cars from day one. However, all zero-emissions vehicles are exempt in the first year, while low-emissions vehicles with a list price of £40,000 or under stay exempt in subsequent years. Still, even those vehicles where the list price exceeds £40,000 require only £310 in VED payment over years two to six.

This compares favourably with the VED necessary to pay for petrol, diesel or alternative fuel vehicles over the same period. Thus, you could easily overlook that low-emissions cars, which come in electric and hybrid forms, can require larger upfront payment. Your favoured model might even come with a government grant; the BMW i3, for example, includes such a grant of £5,000.

An electric car could also hold its value relatively well over the years, making it ideal to sell for a healthy return later down the line. MoneySavingExpert.com has cited Tesla, one of the most successful companies in selling electric cars, as the third most effective brand in helping to preserve its cars’ value. That value was reported to fall by only 33% per year.

A carefully chosen car insurance policy

To use a car on the roads, it is legally necessary that you have car insurance for it. MoneySavingExpert.com advises you to secure that insurance ahead of becoming the car’s legal owner – as, should anything occur to the car, you will be responsible. Even if you take very good care of that vehicle, you can’t entirely rule out an accident like another car driving into the back of yours just after you have driven it out of the dealership.

If your car has insurance, you could benefit from having a good look around when the time comes for you to renew it. Maybe, when you originally bought that car, it already came with insurance. While renewing the existing policy could seem like the most straightforward strategy, it might not necessarily be the kindest on your bank balance. Furthermore, taking account of policies from different insurers does not have to be as time-consuming as you currently expect it to be.

If you live in the UK, one time-efficient tactic is arranging for an independent insurance broker to pore over different policies on your behalf. Your chosen such broker could be Call Wiser. That company, operating at Andover in Hampshire, can consider what over 30 of the leading UK insurance providers are offering as it searches for the most suitable deal for you. An appealing quote could be sent your way in just 10 minutes when you submit an insurance application to Call Wiser.

The Lifetime ISA Explained

By Frugaling Leave a Comment

On April 6^th, the start of the new financial year, a new ISA class was born. The Lifetime ISA, known as the LISA has been launched to help first time buyers and retirees save up for life’s uncertainties.

A replacement for the Help-to-Buy ISA, the LISA allows for tax-free returns on deposits up to £4,000. Where it really stands out however, is that the government will also match your deposit up to 25%, meaning you could get up to £1,000 on top of your deposit – and get returns on the whole amount.

Available for savers between the ages of 18 and 40, the LISA allows you to get a 25% match of your investment every year until the age of 50 years old. So long as you keep your money in the ISA until you’re 60, unless you’re withdrawing to fund a first home, you’ll continue to get the reward.

That said, those that withdraw for other means will be liable for a 25% penalty on the whole amount, which could render the ISA pointless. Therefore it may be said that the ISA is ideal for use as part of a long-term pension strategy so long as you know the risks.

As the government’s auto-enrolment pension scheme also offers a good return for pension savers and is more stable, it may be worth considering the LISA as just part of your pension plan, rather than the entirety of it.

Check out this infographic for more information! (courtesy of Savings Deals, click on the infographic to visit their site!)

The ultimate checklist for things to have when selling an inherited property

By Frugaling Leave a Comment

If you have recently inherited a property, the decision about potential next steps can be daunting. It is important to be fully aware of what is required of you, what you’ll need in order to be successful in selling the property, and to know where to go for expert information or support.

In the initial stages, there are a few important issues to address in order to make preparations before a sale. Firstly, consider the nature of your inherited property and the type of ownership you have; are you the sole inheritor, or will a decision be required as a group? Depending on whether a valuation of the property has already been performed (e.g. if a person had this calculated in their will), you may need to find out how much the property is valued at. Alongside this, it is essential to be clued up on how tax on inherited property works, and how this may be affected by the sale of the estate.

You will need to have a Grant of Representation, or ‘Probate’, before you are able to sell the property. Finally, consider your selling options – are you looking for a fast and efficient sale through a specialised company, or are you looking to do the work yourself?

Types of ownership

Property is often passed to descendants or beneficiaries through the terms of a deceased person’s will. However, rules differ according to how the property was owned and split, and how this might be addressed in the deceased person’s will. Be sure you have a clear idea of how your share works, and if you have the permission of other parties to sell the property.

If, as addressed on the UK Government’s website, property was previously owned through a ‘joint tenancy’ agreement, the property would usually automatically go to the surviving partner(s). Clearly, it is important to establish effective communication regarding the sale if property is distributed through more than one heir.

Once you are clear on the particulars of owning the inherited property, you will need to consider how the law on Capital Gains of probate property may affect the sale of your house.

Taxes on property

Inheritance Tax is usually paid by the estate of the deceased, as the UK Government’s website points out. However, you may need to pay Capital Gains tax if you sell the property at a profit at a later time. These rules are different if you live abroad, and separate rules may also apply if you own another home.

Calculating whether a profit will be made on a sale involves a calculation of the market value of the property. This is required for an evaluation of Inheritance Tax value, so can usually be found in this way (if this has been calculated by the benefactor). In some cases, the value of the property may not have been calculated before the person died. In this case, an estimation of the worth of the property is required before anybody has the legal right to deal with the estate. You can do this by hiring a Chartered Surveyor to estimate the value of the property, or by utilising the services of estate agents to provide a probate property valuation. Using the average value of 3 estate agents’ estimations, HMRC will use this value to calculate any Inheritance Tax due.

Granting Probate

Where an executor has been named, they can apply for a grant of representation, which gives them the authority to deal with the matters of the estate.

To successfully be granted a Grant of Representation (or ‘Probate’), applicants will need to provide several pieces of information about the person who has died, including details on their assets, legal status, copy of their will, death certificate, and codicil if relevant, and a summary of their inheritance tax details, and send this to the relevant Probate Registry. This process can take some time – with a straightforward sale taking a minimum of 2-3 months.

Once Probate has been granted, you have a few options in the selling of the estate. You can choose to undertake the selling of the property as an individual, or enlist the help of experts to take off some of the pressure. Companies such as Probate Purchasers often ensure a quick and efficient sale of probate property, for example.

Essential knowledge and considerations

It is important to have a good knowledge of the processes required of you, before an inherited property can be sold successfully. It may be an idea to make a list of the questions you need to answer: how the property may be divided between stakeholders, if all of the relevant valuation information has been gathered, and if any Capital Gains tax will apply when you sell the property.

The ultimate guide to saving money on a new apartment

By Frugaling 1 Comment

Moving into a new apartment can be very exciting. After all, you’re going to get a complete change of scenery; in fact, you might even be moving into a whole new town, with exciting opportunities that have simply never been open to you before.

However, moving – and settling – into an apartment can be surprisingly punishing to your bank balance. There are so many little things that you have to carefully consider during the moving process – and you can easily imagine the frustration that will set in should you overlook one of these little things and, as a result, be left with a nasty financial sting.

Hence, we have decided to compile this thorough guide to saving money along the way – whether you will be buying or renting an apartment to live in or splashing out on one to allow others to rent it.

Weigh up different removal costs

If you are buying or renting what will be your new home, then how many items do you need moving from your current residence to this new one? Whatever the number, it might not include any furniture – if, for instance, you are leaving your parents’ home or a furnished property. Therefore, you might not need anything more than a car and a few friends to help you with moving everything.

However, you might actually have an abundance of items – including heavy furniture, such as a television and sofas – to shift. In that case, you should probably avoid over-stretching yourself; hire a van or from a removal company, don’t just stick with the car and your mates. Even if you reckon that a lot of items need to be transported, you might be able to save money by forgoing a removal company in favour of a van, as this could be sufficient for your requirements.

Nonetheless, MoneySavingExpert.com advises: “For those who are moving from one furnished property to another, you’ll probably need to enlist the help of a removal company.” So, do try to keep a sensible limit to the extent of your penny-pinching.

Turn to web companies to get free furnishings

If your new pad will be largely empty and, therefore, require you to get hold of lots of new furniture, appliances and other items, keep in mind that you could obtain them surprisingly inexpensively. In fact, hundreds of great items are daily available at no charge, thanks to web communities such as Freegle and Freecycle. This will probably have you asking: “So, where’s the catch?”

You could end up spending a lot of time fruitlessly searching for one, as it doesn’t exist. Web communities work through allowing people to offer their unwanted items to local communities. That’s certainly good for the environment, as these items are not simply deposited on landfills. It can also be good for your financial health. Furnishing staples like beds, sofas, TV sets and fridges can be picked up from web communities – and you might even come across more specialist but also useful goods such as ornaments or iPads.

Still, consider that, as you look through what web communities are offering near your fresh apartment, you could stumble across some “moth-bitten tat”, as MoneySavingExpert.com calls it. Getting the best goods from these communities could require you to spend time thoroughly researching, not to mention maintaining a careful lookout.

Trim potentially hundreds of pounds on gas or electricity bills

You might want to resist simply settling for the energy supplier whose services were in place when you moved in. Of course, those services could “just so happen” to be the most suitable for your own needs, too. However, it’s easily possible that, by sticking with them, you would be essentially throwing away what would add up to hundreds of pounds a year.

Therefore, don’t be afraid to look at alternative options. Changing to the best option could be as simple as contacting your existing supplier and asking to be switched to a different tariff that they offer. However, even switching to a completely different provider would likely be worthwhile. This is because your own choice of provider and tariff, decided on following your own thorough research, is likely to be much less expensive than the tariff you were placed on as you moved into the apartment.

Here’s another quick tip: upon moving in, take meter readings. This would be good for checking that you are not still paying for the gas and electricity usage of the apartment’s previous owner.

Tread carefully before investing in a buy to let apartment

Stories about millionaires operating massive portfolios of buy to let properties could lead you to think that joining these people in buy to let investment would be a good idea. However, the success of such a project can depend on a wide array of factors. This is MONEY reports experts advising making such investment for income rather than short-term capital growth.

So, the prices that you pay for properties and at which you can later sell those properties shouldn’t necessarily be at the forefront of your mind. You should instead think primarily about the yields and how they differ between properties. A property’s yield is the annual rent that you would receive as a percentage of the buying price. Thus, a property costing £200,000 and bringing £10,000 in rent has a yield of 5%.

You could find that certain areas have properties offering particularly high yields. Buy to let Leeds properties commonly have yields of more than 8%. That city also has a market of many students seeking apartments. With assistance from Flambard Williams’ investment property consultants, you could acquire relatively lucrative apartments in the West Yorkshire city – and other major settlements including Manchester, Liverpool and Bradford.

Buying and letting an attractive apartment in Leeds in particular could help provide a strong foundation for your property investment journey… and, indeed, for what could later develop into a large portfolio of apartments in locations dotted across the UK. We wish you luck.