A finance company has to guard its reputation and image with its customers, but the HMRC will anger millions by claiming that they have underpaid tax by roughly £1,500 each.

Some lucky tax payers will get a rebate of £400.

Those effected will likely pay their tax through the Pay As You Earn system and this development does not affect Self-Assessment tax payers.

It’s reckoned that over six million people will be affected and of those, nearly 1.5 million owe an average of £1,500 apiece. The irony is that around 4.5 million have overpaid and will receive a rebate.

Figures suggest that £2 billion has been underpaid and £1.8 billion overpaid, so the Treasury is down by some 200 million. And if the Treasury is down, then action has been taken.

Many observers wonder if retrieving 200 million is worth the negative PR at a time when the austerity measures are about to cut deep. But Treasury Minister David Gauke was unrepentant, saying that it was not the place of the Government to “…just wave goodbye…” to the money that was owed by so many.

He went on to say that:
“At the moment we have said that those who owe more than £2,000 – those who are obviously in the most difficult position – we’re reviewing exactly how we’re going to do that. For those who owe less than that we will be seeking to recover that over the course of the 2011/2012 tax year through tax codes.”

As to where the HMRC appears to have got the sums wrong, it comes down to a new computer system which was introduced in 2009. It has picked up a number of discrepancies and is more accurate in its calculations. This new computer system has come at a time when there has been such a change with working practices and patterns.

Pay As You Earn was first introduced in 1940 when work was a simple affair, with most keeping one job and experiencing little change in their salaries on a yearly basis. Now with many people holding down two jobs, and commission based earnings becoming more prevalent, the Pay As You Earn system is struggling to cope.

Millions of letters are about to be posted informing tax payers of their liability, or windfall.

Some experts reckon that some individual tax payers will get a refund, as a well as a new charge, effectively cancelling out each payment.

The problems occur when the new computer system spots that contributions made via tax and national insurance using the Pay As You Earn system, do not match those on record at the HMRC.

The tax office was at pains to point out that everyone affected has a right to appeal, especially if they can demonstrate that they have provided all the necessary information in good faith.

A HMRC spokesman told the BBC that:
“The overwhelming majority of PAYE cases – over 40 million – are right, so most people have paid the right amount of tax. But for a variety of reasons in some cases there will be a discrepancy. The government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy.”

It can only be hoped that HMRC will come under the same scrutiny as a finance company which had come to the same conclusion about its customers’ contributions.

Guest Article by Neil Camp

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The package is called RSA echoice Car Insurance and it has been launched for online users only. RSA are promoting it as a new pick and mix product which will allow online users to get flexibility and control with their policy, tailoring their agreement to meet their exact needs.

RSA customers will have the ability to build their own policy, starting from a basic level and then picking combinations from around ten cover options which might include vehicle breakdown, legal assistance, emergency assistance and legal care. What’s more, that options can be added throughout the life of the policy.

Head of car insurance at RSA, Keith Maxwell, said:
“RSA echoice is all about empowering the customer to take complete control of their insurance. Our customers want to be able to pick and mix their covers, rather than buying an ‘off-the-shelf’ package as traditionally provided by insurers. RSA echoice not only enables them to do this but also helps ensure that customers will only ever pay for the cover they want and need.”

The concept behind the RSA car insurance scheme echoice is to give power to the consumer. They will be able to self-administer their own policy, without having to telephone call centres to organise the various options. And a consumer can make the changes they require on a 24-hour basis, via their own computer.

The ability of the consumer to self-administer their policy, means that central costs to RSA can be kept down and therefore people’s premiums can also be kept low.

The new car insurance scheme will be available at the RSA website, as well as leading comparison websites.

Guest Article by Neil Camp

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The year-on-year figures for the summer month of July’s debit and credit cards spending were released by the Barclaycard Spending Index and show an upward trend of 9.9%.

Although an indication of the use of plastic in July, the Barclaycard Spending Index does not take into account cash payments, nor does it adjust for price increases/decreases. It reflects only the value of debit and credit card spending that is processed through the Barclaycard clearing system.

The figures lead Barclaycard to the conclusion that the traditional sales and retailer discounts offered in the summer months have boosted consumer spending, which challenges much of the opinions that confidence in the consumer market has slipped.

Looking at the figures also reveals that the year-on-year returns have shown a steady increase since the start of 2010 and that July is the third month this year that the figures have increased by plus 9%.

Head of Barclaycard UK Payment Acceptance, Stuart Neal, said:
“If consumer confidence is taking a hit, it’s not happening on the high street. If spending remains at this level compared to last year, 2010 could prove overall to be a very good year for retailers.”

But although the year-on-year figures look strong, the July to June 2010 figures only show a slight increase of a touch under 2%. Barclaycard say that this might be down to consumers taking advantage of earlier sales in June as some retailers rushed out discounted items.

As to the Barclaycard Spending Index itself, it is based on spending by all debit and credit cards across 44 retail sectors. And the retailers analysed are those that use Barclaycard Payment Acceptance to process their transactions.

In all, the organisation accounts for 30% of the market, processing debit and credit card payments for 85,000 businesses in the UK.

Guest Article by Neil Camp

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Its mortgage business aside, Northern Rock has been a major player in the children’s savings bond market and the launch of Issue 1 of the Little Rock Fixed Rate Bond, which was originally launched in early August, was a great success.

Northern Rock are keen to point out that Issue 2 of the Little Rock Fixed rate Bond is a three-year investment vehicle and offers a highly competitive rate of interest for only a one pound minimum deposit.

Anyone under the age of 16 can open an account, accompanied by the name of an adult acting as account trustee. Those holding an account are known as ‘Little Rockers’.

Those wishing to open an account can do so from a branch of Northern Rock, or via a postal application. A choice of free gifts are also available for those opening a new account.

Cash, cheque, or transfer can be used to open an account and no more than £20,000 can be paid in. Withdrawals are not permitted before 1 October, 2013, the time when the account reaches maturity. Northern Rock reminds its customers that the account is a limited issue which can be withdrawn from new entrants at any time. Also, the account is non-redeemable.

Interest is paid annually on 31 August and is offered at 4% gross per annum.

Given its recent difficulties and track record in the mortgage business of the original Northern Rock, it’s no surprise that the institution is at pains to highlight its new openness.

The announcement accompanying news of the Issue 2 of the Little Rock Fixed Rate Bond comes with the declaration:
“In keeping with Northern Rock’s commitment to providing openness, transparency, and fair treatment of customers, full product details for Northern Rock accounts are available on application in the Terms and Conditions.”

Guest Article by Neil Camp

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The company Debt Free Direct has issued a warning to consumers to seek debt advice as soon as they can once they feel that their personal finances are getting out of control. And increasingly debt loans will play a major role in the coming years as people struggle to make ends meet. The Insolvency Service has released figures that show a worrying increase in the number of personal insolvencies; this year alone it had increased by 5% on the same period last year.

This report reveals that 34,743 people in England and Wales have become insolvent in the three months before June; there is some comfort in the fact that this is a 2.6% decrease from the first quarter of 2010. However, experts believe that this continually high rise in insolvency figures will continue on through the year and into the next, and warn that there is the possibility of another sharp increase.

The exact composition of the insolvencies are as follows: there were 14,982 reported bankruptcies, 13,466 Individual Voluntary Arrangements and 6,295 Debt Relief Orders. Whilst bankruptcies were down 20.6% from last year, Individual Voluntary Arrangements were up by 10%.

Commenting on the statistics, Derek Oakley, Debt Free Direct’s Insolvency Director, said: “This 5% year-on-year increase in personal insolvencies shows consumers are still struggling in the wake of the credit crisis. Consumers are advised to continue to be cautious with their finances and seek debt advice sooner rather than later if they are experiencing difficulties meeting their financial commitments.”

There are a multitude of factors that can contribute to personal insolvency: government cuts to public spending, redundancies, tax increases, increased interest rates, all of these have been attributed to the rising number of insolvencies.

It is no wonder, then, that debt loans are on the increase. With the strain of the current economic climate, people are desperate to find ways to keep themselves out of the red.

Guest Article by Neil Camp

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Together, UK students have earnt around £4 billion a year to counteract the effect of student loans. 1 in 3 now have to work during term time to boost their income and level out the cost of their loans. These students spend on average 13.9 hours a week working. So what has attributed to this problem? Living costs and the current economic situation are certainly top factors, and have contributed to more parents being unable to help their children financially in their university careers; this means that students are having to find more ways to fund their education themselves.

First year students, the report suggested, are working more hours a week than they are attending lectures. This only changes in their final year, when the earn-study balance shifts towards ensuring a good degree mark.

The report has also highlighted regional differences in this new trend. A student in Northern Ireland works on average the least number of hours, at 10 hours per week, whereas the highest number of working hours (15.4) can be found for students attending universities in the South West of the country, at universities such as Bath and Exeter. London and Scotland follow closely behind the South West at 14.8 hours and 14.6 hours respectively.

This regional trend may be to do with the regional differences in hourly rates: students at universities in the South West are earning £7.52 a week, and work the longest hours. This can be compared to Wales, where they earn the lowest hourly rate at £5.27. Weekly, these two sets of students on average earn £115.67 in the South West, and £56.25 in Wales.

“A huge majority of students are working during term time to help fund themselves through university. Understandably, this adds an additional pressure as they balance working life with their studies. At Lloyds TSB, we try to make it easy for students to manage and make their money go further by providing tools such as free mobile banking which allows students to check their balances, transfer money and also receive text alerts, as well as a range of discounts such as a free three year NUS card,” says Jatin Patel, Personal Current Accounts Director at Lloyds TSB.

Student loans are vital for students to maintain their university careers, however it is becoming increasingly necessary for them to supplement that with money they have earnt themselves, even if – as the report suggests – this comes at the loss of hours spent in lectures themselves.

Guest Article by Neil Camp

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RSA is on the hunt for Aviva’s non life insurance business, but it’s no deal as the Board of the Norwich Union (as it was formerly known) say think again.

The RSA bid for Aviva’s non life insurance business is worth around £5 billion cash, but directors of Aviva have given the offer the cold shoulder, saying that the business is worth far more. RSA is not after the cheap life insurance business.

RSA is after Aviva’s general insurance business which has operations in Canada, Ireland and the UK. But the bid does not include the breakdown motoring organisation the RAC, or Health.

The small print of the RSA deal included a provision which meant that Aviva would have been left with the pension liabilities of not only the Health business, but also the general insurance businesses of the operations in France, Italy, Netherlands, Poland, Singapore and Turkey.

The offer from RSA did little to impress Aviva, although the City of London is now awash with thoughts that it’s about time the super insurance group was broken up to maximise shareholder value.

Aviva doesn’t agree and was vociferous in its defence, pointing that the highest shareholder value would be kept by keeping the businesses targeted by RSA within the same group.

The Aviva Board backed up their view with a number of assertions as to the strength of the current business.

Not least that a recent review had revealed that having both Life and Non-Life businesses is the best way to deliver significant capital and earnings benefits. Also, that there are further cost saving synergies to be realised over the short to medium term.

But, as always, it comes down to filthy lucre and RSA, as always with such bids, is bidding low to entice investors and will only reveal its true bid as matters develop.

Aviva is basically saying that RSA is not digging deep enough into its pocket for a business that not only has a dominate market position, but one that also has superb future potential.

To this end, Aviva is reminding RSA, and the City at large, that it is not only the leading general insurance business in the UK and Ireland, but it is the number two player in Canada. Given that, it should be valued accordingly.

What’s more, Aviva contends that the insurance sector is at its lowest point for years and RSA is making a bid at the bottom of the cycle which does not reflect the businesses true earnings potential. They cite the example that in 2006 operating profits of £1.7 billion were lodged in 2006, whereas it had fallen back to £1 billion last year.

Aviva believe that to sell its general businesses now for £5 billion, would be a travesty.

The howls of protest were led by Lord Sharman, the Chairman of Aviva, who said:
“The Aviva Board considered RSA’s proposal carefully with a clear focus on maximising value for Aviva shareholders. Given the compelling strategic and financial benefits to Aviva shareholders of retaining the GI business, its upside potential and the terms offered by RSA, the Board was unanimous in rejecting this proposal.”

Andrew Moss, the Aviva chief executive, weighed in with:
“The progress we’re making in reshaping and transforming Aviva was evident in the 21% increase to £1.27 billion of operating profits at our interim results and we firmly believe this strategy will continue to deliver superior value for our shareholders.”

But whether the RSA gets their hands on the Aviva non life insurance business, leaving it with the cheap life insurance business, will not rest with the directors of the target company. It’s the big fund managers who control large chunks of Aviva stock that will ultimately decide who gets the prize. But RSA will have to pump up their bid a way before any sale might be agreed.

Guest Article by Neil Camp

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The latest Halifax research report reveals that a bank loan should only be contemplated after a good dig down the back of the family settee, because they reckon that over £43 million could be lost down amongst the cushions.

The research by the Halifax bank has found that 65% of Brits regularly dig out loose change from various hiding places; the sofa being one of the most nefarious for snaffling all of those loose coins. Topping the ‘league table’ of places where loose change is regularly found are pockets. 39% of Brits in the study claimed they found loose change regularly in their pockets, with the bottom of a bag coming in at 36%. The car and down the back of the sofa took the last two places.

The actual amounts of loose change are high; the study revealed that in a desk drawer, for example, the highest value of loose change is around £3.59. On average, the British estimate they have about £17.69 of loose change scattered around these various places.

The study also highlighted a difference between the two genders. Whilst the average minimum of change that a Brit would stop to pick off the street is 50p, this rises to 61p for men and falls to 47p for women. A generation difference has also been revealed, with the younger generation tending to turn their noses up at picking change up off the street that isn’t more than 87p, whereas the older generation would pick up an average minimum of 24p.

In Yorkshire and Humberside, people don’t pick change off the street for nothing, and have an average minimum of 94p; just across the border in the North East, they are much less fussy, picking up a minimum average of 24p.

Three quarters of Brits save their change in one place; a jar full of coppers or a bag full of silver coins are a common sight in many British households according to this study.

“These figures prove that we should no longer ignore our loose change but manage these small sums more wisely. The old saying ‘take care of the pennies and the pounds will take care of themselves’ continues to be firmly the case. We need to recognise this, instead of leaving our loose change languishing down the back of the sofa” says Flavia Palacious Umana, Head of Products, Halifax savings, says.

So the advice from Halifax, and one can imagine from many of the country’s banks, is to take a dig around the back of your sofa or the floor of your car before considering taking out that bank loan; who knows how much you may find.

Guest Article by Neil Camp

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The newspaper reported that while some officials think that declaring bankruptcy is the best option for Fergie, her ex-husband, The Duke of York, is trying to draw-up a rescue plan, which could include something like a debt consolidation plan.

It’s said that The Duchess of York has debts totalling five million pounds and her financial situation has not only alarmed the Queen and the rest of the Royal Family, but also that it has been discussed with the Prime Minister, David Cameron.

What makes the situation tricky say independent observers, is that up to now, no senior member of the Royal Family has been made bankrupt and if Fergie does decide to fall on her sword, it will be an unwelcome shock wave through the British establishment.

And The Duke of York will feel the embarrassment most keenly, especially as he is the UK’s Special Representative for International Trade and Development.

As to the figure of five million pounds, it is understood that the debts are split almost equally between UK and US creditors. The interest continues to accrue on the debts and is reckoned to amount to several thousands of pounds every month. But currently Fergie has no real income to cover the payments.

The Duchess of York has suffered a number of recent setbacks, including a major gaffe when she was filmed by the News of the World allegedly selling access to her ex-husband for half a million pounds. Everyone involved in the incident has made it clear that the Duke had no knowledge of his wife’s dealings to sell quality time with him.

Indeed, the Duke of York is said to have personally settled some of his former wife’s debts and obligations.

Inside sources say that Fergie built up the debts through a lack of understanding about money. Not only has she been incredibly generous with friends and colleagues, but she has also been using expensive lawyers both in the UK and the US. She is said to have not fully appreciated the amount of fees that legal teams can charge for advice.

The 50-year-old Fergie has been in this situation once before, having amassed debts of just over £4 million in the mid 1990s. On that occasion she went to America and earnt millions to repay what she owed. She became an ambassador for a weight loss company and also published her autobiography.

Experts reckon she can’t pull the same trick twice though, as her earning power has dipped in the US, where she is no longer seen as a credible character.

Debt consolidation might just be one of the tactics Fergie might use to stave off bankruptcy.

Guest Article by Neil Camp

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Recessionary times always bring out ways of quickly raising finance and for many couples unhitching from the marital yoke, getting a firm to buy the gold, rather than just pawning it, appears to be growing in popularity. The recent difficulties in the economy have led to this trend, with postgoldforcash.com having bought over 10,000 engagement and wedding rings since 2009.

It’s not, however, purely financial reasons that are driving people to sell their precious wedding rings. Many find their wedding rings are no longer that precious after divorcing from their partners; divorce-online.co.uk has predicted that the number of divorces will increase in 2010 due to the economic recession. In the first quarter of 2010 alone, there was a 6% increase in the breakdown and eventual separation of married couples compared to the same time period in 2009.

For England and Wales, the totals are usually on the high side. In 2008 the divorce rate was over 11.2 people divorcing for every 1000 that married. This was relatively low by the standards of England and Wales, but globally this is the one of the highest divorce rates seen.

Arguments over mortgage payments, unemployment, savings, what to spend and what to save, are just some of the areas in which couples may be finding strong disagreement in any marriage. Combined with the current economic situation, and these problems are magnified to the point where they have appeared to be dissolving marriages at staggering rates.

The notion of selling one’s wedding ring for some cash is not quite so surprising a notion when – as the case appears to be now – it is combined with divorce. But both notions are apparently driven by our gloomy economic climate, although ‘divorce’ has yet to appear on any prescribed money saving tips list.

With personal finance looking down, selling a wedding ring appears to be one way of overcoming two problems at once. Those wanting to make some extra money this way can find a number of ‘gold for cash’ websites and services, varying in reputation and price.

Guest Article by Neil Camp

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