High-Earners Lead Self-Employment

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The UK has seen significant growth in self-employment over the past several years, and a recent report has shed new light upon the nature of this trend. According to a study by an economic think tank, it is high-earning individuals who have been the driving force behind the increase in self-employment.

Self-employment undeniably plays a major role in the UK economy at present. It has been a rapidly-growing area for several years now, accounting for half of the employment growth in the UK during that time. There are currently just under five million individuals in the UK who are self-employed (including those who have a second job or “sideline” in self-employment alongside an employed role). This is well ahead of many other types of somewhat non-typical employment. For example, the UK’s agency workers currently number only around 850,000.

The Resolution Foundation examined trends in self-employment, and found that higher-earners were disproportionately represented in the growth of self-employment over the past several years. Since 2009, 57% of self-employment growth has been made up by what the foundation called “privileged” self-employed individuals – those who are well-qualified and work in higher-paid fields. These include professionals in the accountancy, legal, and health sectors among others. These “privileged” self-employed people commonly achieved income in the £45,000-65,000 range annually, much more than that of the average UK worker.

There is such a divide between these workers and other self-employed individuals, the Resolution Foundation says, that the self-employed are now not so much one group as two quite separate and distinct ones. Those who do not fit into the privileged group not only earn less, but are more likely to be underemployed and to receive tax credits.

The Resolution Foundation’s Adam Corlett says: “Rising self-employment has been the biggest jobs story of the last decade… but behind the headlines the real recent growth area for the self-employed has been in lucrative sectors such as advertising and banking.”

Many news stories and much popular discussion about self-employment growth has focussed on typically lower-earning individuals finding new and more lucrative opportunities by striking out on their own. However, this is in many ways at odds with the picture of self-employment painted by the Resolution Foundation’s report, in which individuals who are already well-qualified high-earners are heavily represented. Many of those who have been the subject of public discussion, such as self-employed drivers for delivery services or drivers for Uber, have found themselves in a work situation which the foundation describes as “precarious.”

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What Really Cuts Your Bills?

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There is a lot of advice out there for cutting down on your bills, but not all of the tips are entirely effective. It is hard to know which pieces of advice are really worth following and which are not so worthwhile.

Switching Suppliers

Of all the many pieces of bill/cutting advice, this is arguably the most oft-repeated. This is with good reason; it is also arguably the most significant. Being on the best deal for utilities and telecoms can save a lot compared to being on the worst deal, and the best deals are almost always saved for initial contract periods. Whenever one contract ends, it is definitely and absolutely worth consulting a comparison site to see if a new contract and supplier can get you a better deal.

Avoiding Standby

Most modern electronics don’t really use a great deal of power on standby, so leaving them on like that for a while in between periods of using them won’t do a great deal of harm. But when devices are left on standby all the time they are not being used, all day and all night, this can really mount up. When there are multiple devices being left this way, then the effect on your bills will mount up all the faster. Making sure you turn things off properly at the socket when they are going to be out of use for more than a short period, particularly overnight, can result in a noticeable drop in electricity charges.

Shorter Showers

Cutting down on the time you spent in the shower is something that could cut more than you might think off of your bills. This is particularly true if your property’s water supply is metered – something that has been on the rise in recent years and is now the case for many homes. Assuming you do have a meter, showering will add to two of your bills; your water bill, and your gas bill because of the need to heat the water. Foregoing the pleasure of standing under the flow and cutting a few minutes off of your shower time every day can lead to a significant saving each month across these two bills.

Boiler on a Timer

Whether it is worth putting your boiler on a timer is something of a contentious question. Some claim it takes more energy to heat up a cold house or tank of water from scratch than it would to keep it warm in the interim. While it is true that this factor means the savings aren’t as big as you may think, it is still decidedly cheaper to use a timer. Having your heating off in the day when the house is empty and set to come on a while before you get home can result in a decent saving. Once heated, a hot water tank will generally stay hot enough for at least a day, meaning you can also use a timer to heat your water up for a couple of hours in the early morning then turn your boiler off again until the next day.

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Phoning HMRC Cost Taxpayers £97 Million in a Year

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Last year, waiting on the phone to HM Revenue and Customs (HMRC) cost taxpayers millions, according to spending watchdog the National Audit Office (NAO). Thanks to long wait times, people calling the taxman spent a collective £10 million in call costs while on hold and waiting to speak to an adviser, the NAO said.

Over the span of 18 months, starting in 2014, the NAO said that HMRC’s standards of service when dealing with telephone queries “collapsed.” Over that space of time, the Office claims, the time that customers spend waiting to speak to an adviser tripled and many calls went unanswered. While HMRC has claimed that the majority of incoming calls now get an answer within six minutes, the NAO says that the time spent waiting on hold with HMRC last year could be up to an hour.

In the course of its recent investigation into the standards of HMRC’s service, the NAO calculated the amount that these lengthy calls had costs taxpayers. The cost of phone calls, the organisation reports, was £10 million in total, and the NAO believes that much of this is a result of long waiting times.

The NAO also included the value of people’s time in the calculations, averaging this at a rate of £17 per hour. On this basis, the organisation estimates that taxpayers spent a total of £66 million worth of their time just waiting on hold to speak to an adviser, and a further £21 million while talking to HMRC after their call is finally answered. This brings the NAO’s estimate for the total amount lost to taxpayers on calls to HMRC, including both call charges and time spent on the phone, at £97 million.

One of the key causes for the drop in standards for HMRC when it comes to dealing with phone queries, the NAO claims, is staff cuts. Specifically, the organisation points to the fact that the tax authority drop 11,000 of its staff as part if its drive to increase the number of tax returns completed online, on the assumption that this would result in fewer phone calls to be answered. These cuts took place in stages between 2010 and 2014.

Seemingly recognising this as a misstep, HMRC has since increased the number of staff available to answer helpline calls by 2,400. These extra staff were brought in last autumn, after typical waiting times for calls to HMRC peaked at 47 minutes.

In response to the NAO’s report, HMRC director general for customer services Ruth Owen said: “We recognise that early in 2015 we didn’t proide the standard of service that people are entitled to expect… We have since fully recovered and are now offering our best service levels in years.”

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Food Prices Expected to Rise

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Significant increases in food prices are expected to take place in the near future, particularly the price of produce grown in Britain. The cost of food is expected to increase as a result of unusual weather conditions, which have caused problems for UK farmers growing common crops such as carrots, potatoes and cauliflowers.

Unusual weather patterns have been particularly significant over the past couple of month, and there were two aspects of December’s weather, in particular, that have caused problems for farmers. The final month of 2015 saw temperatures that were unseasonably warm, causing other crops to mature much earlier than intended. This could leave these groups of crops in short supply later, as the planting of successive waves of crops are usually timed to ensure a consistent supply. When the crops affected by December’s warm temperatures should have been ready for harvesting and distribution, many will have instead already matured ahead of time and and proceeded to spoil.

At the same time, December was exceptionally wet, and this led to further problems as crops were damaged or destroyed by heavy rainfall. Particularly hard-hit were crops such as carrots and parsnips. These crops remain fresh while kept in the ground, so are often grown in large quantities and then harvested for distribution in stages over time. Fields containing crops that were waiting to be harvested in this way have been damaged across much of the UK as a result of high rainfall. Wet conditions also made it difficult for people, tractors, and equipment to traverse the worst-hit fields, severely hampering efforts to salvage crops from damaged land before they became unusable.

All of this points towards a shortage of key food items in coming months, and a resulting rise in prices. Many items of produce that have survived or been salvaged are of reduced quality, and some may be deemed unacceptable for sale by retailers, worsening both shortages and the increase that this leads to in the cost of food.

Similar problems have hit farms in many countries across Europe, and have also led in some cases to additional problems. For example, unusually warm winter temperatures in Spain have not just led to similar concerns about early ripening but also resulted in an outbreak of pests and fungi, affecting key crops such as tomatoes, peppers and cucumbers. This could lead to further price rises in the UK, as at this time of year such crops are often imported due to difficulty involved in producing them domestically during the UK’s cold winter months.

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Fierce Competition Among Credit Card Providers

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Many of the lenders who take part in the UK’s credit card market are engaged in a pitched price war. This war has been slowly but fiercely waging for several years now, though has arguably now stepped up a notch and looks set to continue for a while yet. This will most likely mean a mixture of good and bad news for consumers.

The weapon of choice in this war is the interest-free introductory period, with providers offering longer and longer 0% deals to try and attract the biggest share of the customer market. This means that customers are finding they potentially have access to better and better deals for interest-free spending or 0% balance transfer (make sure you know the difference if you intend to apply for a 0% card).

This trend is particularly strong with balance transfer cards. Indeed, six of the UK’s major credit card providers currently offer balance transfer cards which will remain interest-free for a full three years. This means that those with existing credit card balances they wish to transfer in order to avoid interest will benefit from a full three years to clear the balance without having to transfer again.

However, despite the apparent keenness of credit card providers to offer deals that will tempt in new customers, these packages do not come without catches. Balance transfer cards may offer you a nice, long period to clear your balance without paying interest but this is offset somewhat by the fees that must be paid at the point of transfer. These are generally higher for cards that offer longer 0% periods, and tend to be around 2-3% of the balance you are moving over. Those who have fairly large credit card debts they are now trying to clear could find these fees quite heavy, and if you expect to clear your balance in one or two years then you might still get a better deal with a card that offers a shorter period.

Another catch is that while lenders are keen to attract customers to their deals as opposed to the offerings of the competition, they are still fairly cautious about who those customers might be. Lenders are reluctant to offer good deals to those with blemishes on their credit history. The better the deal, the pickier lenders are about those blemishes. While the price war that lenders are currently engaged in has caused some very good deals to enter the market, the very best ones might reject you for things as simple as a missed bill payment, and this rejection can then be seen by other lenders as a further mark on your record.

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Where to put Your Money Besides a Savings Account

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Savings accounts continue to offer low rates of interest, leaving many people wondering whether they are even worth bothering with. Ever since the current low-interest environment bit, savers have been looking at alternative ways to get more from their money. Things may be on the way up, but even headline-making best-buy accounts are only offering a couple of percent.

While savings accounts are pretty much unbeatable when it comes to keeping your money secure, there are some alternatives you might want to consider, whether you have a lot or a little to put aside.

Extra Mortgage or Loan Repayments

This might not seem like the most attractive choice at first, because it means giving up all access to the money you put aside. However, it will usually leave you better off overall than putting your money into savings. Think of your finances like a balance sheet. On one side you have money and assets in your possession, on the other side you have debts. Subtract debts from what you have to get your net worth. Both debts and savings grow over time due to interest rates, and your debts probably grow faster because interest rates are almost certainly higher. By removing a chunk of debt instead of adding a chunk of savings, you are having the same initial effect on your overall “worth,” and having a bigger impact over time because it will reduce the growth of those debts and lead them to be paid off sooner. Even paying a little extra can make a big difference if done regularly over time. Of course, you should still only consider this if you are sure you won’t need that money in the future.

Peer-to-Peer (P2P) Lending

Those with a lot of money are investing in properties to get more out of their money, and those who are clued up on the stock market or have access to professional advice (these also tend to be those with a lot to save) might turn to stocks. Peer-to-peer (P2P) lending, which sees you provide money for a person or business who wants to take out a loan, is another investment option, but this time it is equally open and equally useful for those with small savings and those with large amounts. While all investments carry risks and this is what rightly puts off those who could afford to invest but can’t afford to lose, P2P is very much one of the safer options. It has been rated as not much more risky than a bank, and many of the online platforms offering this service have been designed to make the experience as close as possible to managing a traditional savings account. Various fixed terms are available from a few months to a few years, and the interest rates far exceed anything the banks are offering.

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Millions of Tax Returns “Unnecessary,” say Critics

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Critics are claiming that millions of people across the UK are filling out tax returns that are just not necessary. It is claimed that a large portion of those filling out tax returns are required to do so despite not owing HMRC any money at all.

At present, an annual tax return is required of roughly a third of taxpayers across the UK. Nearly a quarter of them (24%) owe very little – less than £50 for the entire year – and two thirds of these (16% of the total number who must fill out a tax return) owe nothing to HMRC at all.

Some of those who must complete a tax return are sole traders or owners of businesses which have not turned a taxable profit – in which case a tax return is necessary to show HMRC that profits have not reached taxable levels. However, many others are required to complete a tax return for entirely different reasons. For example, company directors and employees earning over £100,000 per annum must complete a yearly tax return even if they have no additional, undeclared income whatsoever. Furthermore, recent changes to the administration of child benefit mean that one parent or guardian often finds themselves with the need to submit a self-assessment tax return even if they do not owe HMRC money.

Others, however, may register for self-assessment voluntarily even if no money is owed to HMRC. For those in some unusual and specific financial circumstances, tax returns can serve as useful records to assist with things like applications for loans.

HMRC has defended itself from these criticisms, however. A spokesperson said that the organisation “[doesn't] want anyone to fill in a tax return unless it’s absolutely necessary.” For this reason, he claimed, HMRC automatically takes 400,000 people out of the self-assessment process each year.

The spokesperson also insisted that HMRC goes to great lengths to ensure that the self-assessment process is as easy as possible for those who do have to complete an annual tax return. In particular, he pointed to the organisations’ “bringing in short tax returns and online self-assessment, and we are taking this much further by introducing the new digital tax accounts.”

Indeed it is hoped that new online tax accounts, which will be regularly updated with information about people’s income, could almost completely eliminate the problem of people filing unnecessary tax returns. Fully rolling out this new process, however, is likely to take some years.

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Easy Everyday Cost-Cutting Tactics

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No matter how much you cut costs, there will obviously always be plenty of things that you need to buy. There are also times when it is worth spending more for better-quality, and times when you just want to treat yourself because you can afford it and feel you deserve it.

There is nothing wrong with any of these expenses, but it’s nice to keep their total cost down as far as possible. In particular, it’s nice when you can get exactly what you need (or what you were paying for anyway), but pay noticeably less than you were expecting to.

Cashback Websites

Some time ago now, “affiliate schemes” started to catch on among online retailers. Through these schemes, if another website (the affiliate) sends customers their way and those customers make a purchase, the affiliate gets a cut of the money. The idea is simply to gain more customers.

Cashback websites take advantage of these schemes, splitting their commission with you or even giving it all to you and relying on ad revenue. That way, you get to save money while shopping with major online retailers, just by using the cashback website’s affiliate link instead of heading directly to the store you want to buy from. Savings on most day-to-day purchases will be pennies or a couple of pounds (which can still mount up over time), but on big things like car insurance and broadband contracts the savings can be big.

Switching Suppliers

Regularly switching suppliers of energy, phone/broadband, insurance and so on has become one of the most oft-quoted pieces of money-saving advice. There is extremely good reason for this, because savings can be massive. For example, it recently emerged that a very large percentage of customers are overpaying for energy, mainly by around £160-£235 a year, simply through failing to switch.

In particular, make sure you don’t switch once and then become complacent, pleased with yourself for finding the best deal. Prices often go up as soon as a contract runs out, and even if the cost is going to stay the same markets are constantly changing and the best deals are almost inevitably those for new customers. As a rule, you should start looking for a new provider as soon as the contract with your old one runs out if you want to be sure you are getting the best deal. There are a couple of considerations to make besides price, however. Make sure you are being quoted for a like-for-like service, or the quotes may simply not be comparable. It could also be worth checking out independent reviews to make sure the company won’t provide substandard service.

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The Best Things to Buy Second Hand

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Buying second hand is one of the most well-known tactics to get things for less. The trade-off, of course, is that second hand items have already been used so they will have amassed some wear and tear and have a shorter service life left to them. However, there are certain things which are not particularly susceptible to this problem, and buying these things second hand can be a great way to save money with few if any drawbacks.

Books

Books will generally remain eminently readable even if they become dog-eared and floppy. Most second hand books, however, are in very good condition. They are widely available from charity shops, specialist bookshops, and online for extremely low prices – often a fraction of the original cover price. Unless you want to snap up a new release as soon as it comes out, you will almost certainly be better off buying second hand.

If you like to experiment with new books, you could try buying very cheap ones from a charity shop and then returning them for someone else to read when you are done. That way, you are saving money, reducing clutter in your home, and passing on the opportunity to other book-lovers.

DVDs, CDs and Computer Games

These disc-based goods hold up to their second hand status almost as well as books. Generally, a disc will have to be quite badly scratched before it develops problems. Unless the previous owner was careless, it is probably almost pristine as simply being played does not really put any wear and tear on a disc. These items rarely offer any real disadvantage when bought second hand. Most retailers inspect second hand discs before sale, and will happily accept a return if there is a problem.

CDs are particularly interesting. In the age of the digital download, they have been an oft-neglected medium for some time. For this reason, second hand CDs are often sold at bargain bucket prices. This means that buying a CD and then digitising the tracks (a simple process using software that comes with new computers as standard) can actually be cheaper than downloading.

Cars

Cars depreciate quickly. This fact is the bane of many car owners, but it can be a blessing when it comes to buying a second hand car. Buying cars that have previously been owned is already a popular process, but even if you want the newest model it can still be worth looking at second hand models. Even cars that are just a few months old with very low mileage will sometimes appear on the market, and will generally offer a noticeable discount while in reality being little different from a brand new car.

There are sometimes advantages of buying a new car over a good second hand one. These are usually not so much anything to do with the car itself, but rather retailer promotions like attractive finance deals, long warranties, or free servicing. Sometimes, similar deals can be available on second hand cars if bought from a dealer rather than privately.

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Tips for Better Bulk Buying

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It is no secret that it is usually cheaper to buy things in bulk, but this approach also has its downsides. For example, many people are put off by concerns about using everything up before it expires, or by the challenges of finding enough storage space for large amounts of food. However, there are a number of things you can do to help ensure that bulk buying works out well.

Focus on Non-Perishable Goods

The simplest way to avoid the issue of use by dates is to focus on non-perishable goods, or goods that will take a long time to actually go off even if the date slips by. Tins are good and oft-cited examples, tough bear in mind that these are also heavy and tend to fill up kitchen cupboards quite quickly. Teabags are another good example. They are lightweight, aren’t  very prone to spoiling, and can be bought much more cheaply in bulk. They can also be fairly easy to store, especially as large packs tend to be flexible.

Also, bear in mind that bulk buying doesn’t exclusively apply to food items but to any kind of item that tends to get used up in the home. For example, toilet tissue and kitchen rolls can both sometimes be bought cheaply in bulk. Large quantities of both these items often turn up on deal websites like Groupon.

Share and Cooperate

Another way to get around the problem of expiry dates is to cooperate with a friend when buying perishable goods. Supposing you come across something that is a lot cheaper through a “buy one get one free” offer, or simply buying a pack twice the size. However, that product will only last a week before it expires, and you will just not get through that much in a week. If you have a friend who uses the same product, you could arrange to split the purchase between you.

The arrangement is simple. One of you actually buys the product, then the other pays back a portion of the price and gets some of the product. This way, you both get a better deal and neither of you is stuck with more than you could use before it goes off.

Extra Storage Space

Sometimes it might be easier than you think to create extra storage space especially for buying food in bulk. If you intend to buy a lot of food, it may be worth simply expanding the area you search for opportunities. Some food will keep quite happily without being in your kitchen, so why not keep it elsewhere?

This might be as simple as using a wardrobe in the spare room or a corner of your attic or cellar for food storage. Alternatively, if you have a shed or a garage that is connected to mains electricity you could try putting a small freezer in there. This will allow you to buy a lot of food that is suitable for home freezing when you want to take advantage of offers or reductions.

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