Wednesday, 31 August 2011

Childcare costs stopping mothers going to work, says study

Number of women opting to look after their children instead of doing paid employment increases by 32,000 in a last year

The high cost of childcare and commuting is forcing women to give up their jobs to avoid ending up out of pocket, according to new research.
The study says the number of women opting to look after their children instead of doing paid employment has risen by 32,000 since last summer, with rising childcare costs being a key factor in their decision. The figures are based on analysis of the latest ONS Labour Force Survey, and the number of women classing themselves as economically inactive because they are looking after their family and home.
According to the insurer Aviva's latest Family Finances Report, the average cost of full-time childcare is £385 a month, but this rises to £729 for children under two. Part-time care comes in at £193 a month, or £364 for the under-twos.
On top of this, the average worker is spending £120 (full-time) and £90 (part-time) on expenses associated with their jobs, such as clothes, travel and food, and £147 on school-related costs. After meeting these costs, Aviva said a woman in a relationship on the average part-time salary of £8,557, after tax and national insurance, with children aged one and seven would be losing £98 a month.
In contrast, a woman in a similar position who does not pay for childcare will take home £402 a month once work costs are taken into account. According to the insurer's research, 54% of families say they are not currently paying for childcare.
Full-time workers are better off, but only just. A woman with a one-year-old and seven-year-old who earns £17,513 after tax will have £120 left if she does pay for childcare, If she does not have to meet childcare costs, she will have £1,118.
The report acknowledges the figures do not take into account non-financial benefits of working. "Many people – parents in particular – report further reasons for working, such as the social interaction and mental stimulation it brings," it says. "The question of whether to work becomes even more difficult if people genuinely enjoy their jobs and want to work, but find themselves just breaking even – or even financially worse off – if their childcare costs are beyond their income."
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It also warns that moving from two incomes to one can leave families exposed to potential problems. Louise Colley, head of protection at Aviva, said: "As care costs rise, it's quite possible we will see more and more couples relying on one salary while the other person looks after the children – simply because they may actually be worse off if both people work. However, while this may make financial sense, it can also leave families vulnerable should anything happen to that income earner."
Emily Devane gave up work as a teacher to look after her children, Kate, three, and Sam, one. Devane, who was a history teacher at a school in Hertfordshire, had returned part-time after having her daughter and had planned to do the same after Sam was born.
"I went back three days a week after Kate was born and that worked fine, but the fees at the nursery have gone up," she said. "I did the maths and I worked out I would be earning about £50 a week."
Devane's job meant a long commute and rising petrol costs, plus work after school hours. When Kate was offered three hours a day free of charge at a local pre-school, giving up work made even more sense. "I would have had to find a childminder who would have taken her to nursery and looked after Sam," she said. "It wasn't easy to make the decision – I think for women, particularly educated women, your work defines you. It was really difficult to give up." However, she added: "I could be earning very little money looking after other people's children or be here with my children, which for me seems the wiser decision at the moment."
by the guardian 

Buying a house is cheaper than renting for first-time buyers

Low interest rates and falling property prices mean that buying a house or flat is over £100 a month cheaper for first-time buyers than renting a property is.

Buying a house is cheaper than renting for first-time buyers 
New research shows that the average monthly cost associated with buying a two-bedroom flat for a first-time buyer is around £567. This is £110 lower than the typical rent paid on an equivalent property, according to Halifax, which conducted the research.
The cost of getting onto the property ladder has fallen by 40 per cent since 2008 due to low mortgage rates and a depressed housing market. By contrast, the price of renting has fallen by a fraction of that amount and has even started rising again over the last year.
Suren Thiru, housing economist at Halifax, said that the current economic climate is favourable for prospective first-time buyers.
“The recent decline in the cost of buying a property for first-time buyers compared to renting has been substantial. and reflects the drop in both mortgage rates and house prices since 2008 as well as a marked increase in the average rent paid over the last year,” said Ms Thiru.
Mortgage rates have reduced dramatically over the last few years due to record low interest rates of 0.5 per cent. The average mortgage rate for a new borrower is 3.8 per cent, down from 5.9 per cent in mid-2008, according to Halifax. At the same time the average price of a typical first property has fallen by 14 per cent to £124,378.

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The Government’s move to temporarily increase the stamp duty threshold is also helping first-time buyers.
In a bid to stimulate the housing market, in March 2010 George Osborne raised the threshold at which stamp duty is payable for first-time buyers from £125,000 to £250,000. Halifax estimates that 95 per cent of first-time buyers are now exempt from paying stamp duty.
However the favourable conditions may not last. If interest rates were to rise by 1.5 per cent then buying would be level with renting again.
Ms Thiru also said that the uncertain economy is putting many people off entering the property for the first time.
“While these affordability gains are welcome, conditions in the housing market for those looking to get onto the property ladder remain challenging,” she said.
Halifax's calculation of the monthly cost associated with buying a flat does not include the deposit, which averages £27,127 for first -time buyers. However the lender's calculation does include around £23 a month relating to interest that would be lost on that sum of money if it was saved in an interest bearing account rather than used as a deposit.
Traditionally, the cost of renting has been cheaper than the cost of buying. In 2008 the average cost of buying a house was £212 a month more than the average rent in the UK.

by the telegraph

Friday, 26 August 2011

Should I ask my parents for an early inheritance to get on the property ladder?

My parents are reasonably well off, have no mortgage, are both retired and have cash savings earning little or no interest. 
We are struggling to find the money for a deposit on a house. If I asked for a part of my inheritance now what would be the implications for them?
Property ladder: Most would be first-time buyers find it very tough to clamber on
Property ladder: Most would be first-time buyers find it very tough to clamber on

Linda Mckay, of This is Money, replies: The rising cost of living means that many of those aged under 40 are asking for part, or all, of their legacy ahead of time. Grown up children, such as yourself, may be in desperate need of cash to pay off debts, for a property deposit, to get through a period of unemployment, for university fees for their own children or even to pay for a wedding.
Many taxes are unavoidable but inheritance tax is a very simple tax and one that can be limited with planning. It seems you have a virtuous circle where you need funds now and possibly your parents don't. It is potentially a win-win situation, the only loser is the taxman. 
According to HMRC the annual gift allowance is £3,000, although your parents could add the previous tax year's allowance if unused, which would then total £6,000.  There are other gift allowances, such as gifts that may be given on marriage, your parents could each gift £5,000 but exemptions can not be combined to increase the amounts given away to the same person. For further details visit HMRC
I asked one of our experts for further advice:
Daniel Howard of Skipton Financial Services replies: The implications for your parents would be that the gift would be deemed as a potentially exempt transfer for inheritance tax (IHT) purposes and if they died within seven years of making the gift then the value of this gift would be included within their estate on death. 
However, if your parents survived seven years then no inheritance tax would be payable on this gift.  Alternatively if they leave the money in cash savings earning little or no interest then this will always be included within their estate for inheritance tax purposes.    
Another consideration is that after making an outright gift your parents would no longer be able to access these funds in future should a requirement for capital or income arise.  You say that your parents are ‘reasonably well off’.  
If your parents have no access to the funds they gift to you then it could become a problem if the value of the savings and investments they plan to live off in retirement are depleted or if they exceed their estimated life expectancy.
Inheritance tax is a complex issue and I would always suggest discussing the individual circumstances of each case with an inheritance tax specialist. From the information you have provided it is not possible to give specific inheritance tax advice therefore the information provided is generic.

Linda Mckay adds: Your mother and father should most certainly consult an independent financial advisor to check their personal situation as those relying on the interest of their investments may struggle with no earnings and the continuing rise in inflation. 
They should ensure they are covered by their savings for pension needs, any health emergencies (including care home fees) or housing problems and possible retirement plans so that a decision can be reached that is not purely based on emotion of parent/child car

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Thursday, 25 August 2011

Consumers save £51bn year with voucher codes

The price of goods may be rising but Britain’s “freeconomy” is helping penny-wise shoppers save a massive £51bn a year.

Shop window showing 50pc off goods
Money-off vouchers and the rise of online sites dedicated to discounts are helping the average Brit save nearly £1,200 a year, as 90 pc of us look around for ways to save cash, that is 42pc more than we used to as money gets tighter, according to a survey by Halifax Home Insurance.
Director for Halifax Home Insurance, Lindsay Forster said: "The recent downturn has made us more careful about what we spend and more savvy in searching for savings and getting a good deal matters. People now quite rightly expect a good deal and feel comfortable shopping and even bartering to make sure they get the best price whether for a meal, a flight or even insurance. "
Determination to get the best deal, 12pc of the thrifty Britons admit to haggling for a lower price, and a 20pc refuse to buy anything not on offer.
It seems the bargain hunting mentality is even causing friction in many households, as one in ten gets annoyed when their partner pays full price for things that can be bought cheaper.
As households tighten their belts, luxuries like eating out are made possible by deals on meals with more than half of us saving on restaurants, take-away and fast food.

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Even luxuries like holidays and flights away are being paid for by special deals. Over a quarter admitting that they can only do special things because of money-off codes.
The scale of bargain hunting in Britain has certainly changed perceptions. Only one pc say they are too embarrassed to use discounts, and only 0.5pc say they would look down on those who look for bargains.
On the contrary, it seems that getting a good deal is now a social activity, with 44 per cent of us sharing discounts with our friends and seven per cent even competing who can save most.
Family members are also benefiting the nation’s frugal ways. Over a quarter of us use voucher codes to help pay for better presents for friends and family. And while it may have been taboo in the past, at least for 9pc of us, using a deal on a date is no longer a deal breaker.
The popularity of voucher-codes come just as households face a further rise in essential household bills, with this summer seeing an increase in prices for energy, food and even transport. With the rate of inflation predicted to reach 5pc in the next few months, British households will need all the money saving options available.

by the telegraph.

Tuesday, 23 August 2011

'Clueless' households paying £400 too much for energy

More than 40pc of energy customers turn a blind eye to their gas and electricity costs.

EDF gas bill. UK energy overhaul 'will cost homes and businesses £27bn'
'Clueless' households paying £400 too much for energy
British households could be paying over the odds for their gas and electricity as new research show that nearly 40pc of us are clueless of our monthly usage costs.
Despite the rising year on year costs of our energy bills, the survey by show that 16pc us have no idea at all as to how much we are coughing up towards energy bills every year, and a further 20pc of monthly bill payers have no idea of the total cost of their yearly bill.
This could mean that households may be unnecessarily paying higher bills, especially after this summer where we will see gas prices rise by 16pc to 19pc and electricity prices by 7pc to 16pc this summer.
Scott Byrom, utilities manger at said: “With the current spate of price hikes taking the average bill to record highs, customers should be on their game and know exactly how much they are paying in gas and electricity charges each year. The message is simple – for a medium user, if you pay more than £37 for your electricity and more than £51 for your gas per month, then you are potentially paying too much and should be looking to switch to a better tariff.”
For many households, gas and electricity costs are the second largest monthly outgoing following a mortgage or rent payment and being unaware of the price you pay for your gas and electricity could mean that you are paying £411 more than you need to with the most expensive tariff coming in at over £1,391 compared to the current cheapest at around £980.
This advice follows the ongoing Ofgem investigation into the Big Six energy giants over growing concerns that the energy suppliers may be attempting to appear less profitable to justify the hike in energy prices this summer. The energy watchdog has brought in forensic accountants from BDO to scrutinise how the Big Six energy suppliers calculate their profits.

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Schools Proximities are big priorities for one in three home buyers

More than a third of prospective homebuyers with young children say moving to an area with a good school is their top priority, research shows.

School children - Being near a good school is top priority for one in three homebuyers
Homebuyers in the West Midlands were most concerned about moving into a good catchment area, the survey found 
Moving into the catchment area of a good school was the top priority for 37pc of prospective buyers with a child aged 10 or under, according to a study for Santander Mortgages.
Many were willing to pay an extra £12,000 to secure the home – and school – of their choice. The average house price premium for moving to a good catchment area was £5,663.
One in four of those with a child aged 11 to 17 named proximity to a good school as a major concern.
Homebuyers in the West Midlands were most concerned about moving into a good catchment area, the survey found, with 26pc citing it as a main priority, double the percentage concerned about the issue the last time they bought a home.
In the North East only 6pc of buyers showed a particular interest in the catchment area the last time they purchased a home, but 16pc of people planning to buy a property in the region now considered it a main priority.
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The research suggested that women were much more concerned about moving into a good catchment area than men – they were willing to pay a £7,300 premium, compared with £4,450 for men.
Phil Cliff, a director of Santander Mortgages, said: "People are increasingly concerned about the value of a good education, and in some areas of the country there is a significant amount of competition for places at sought-after schools.
"This has led to many parents trying to move to a particular area deliberately to improve their child's chances of getting into their desired school. Some in-demand property features such as being located within the catchment area of a good school can increase the property value considerably."


Tuesday, 2 August 2011

Be smart when it comes to insuring your smartphone

One in three people now take out insurance for iPhones and Blackberries. But is it worth it?

iphone: Phone makers turning handsets in to 'pocket computers' in bid to compete with Apple iPhone
Most of us cannot live without a mobile phone – figures show nine out of 10 adults own a handset. But high-priced insurance, confusing data roaming charges and the rise of 24-month contracts can leave many customers paying more than they bargained for – easily adding hundreds of pounds to your annual bill.
And with a lack of consumer protection if your device falls into the wrong hands, the customer will be forced to foot the bill – proving an expensive lesson.
With the latest iPhone or Blackberry the phone of choice today, there has been a marked rise in those taking out insurance. In 2006, just 3pc of users insured their handset, but by 2011 32pc had taken out a policy in the past 12 months – a number which is likely to rise as mobile handsets increase in capability and price.
Unfortunately, finding the best answer is not as simple as going to a price comparison site and typing in your needs. Here we examine the options.

Insurance from your mobile company

All major mobile networks and high street retailers encourage consumers to take out insurance for their new handset at the point of sale, with some major networks charging up to £15 per month – or £180 a year – to insure the latest smartphones. Yet despite the high cost, figures from sim-only operator GiffGaff show that almost 80pc of policyholders have never made a claim.
James Atkinson, editor of Mobile Magazine, said: "There is a lot of emotion involved when buying the latest mobile or gadget, so people's judgment can sometimes be a little clouded at the point of purchase."
When looking at whether this insurance is suitable, price is often the first consideration. For example, it costs £15 a month to insure an iPhone 4 16GB with O2, and you would still have to pay a £75 excess if the phone needed replacing. This would rise to £100 if you were unlucky enough to need it replacing twice. So a year's worth of premiums, plus one replacement phone would cost you £255 – half the cost of a new handset.
But making sure you are properly insured is not straightforward. For instance, while this type of policy is likely to be costly, it can be riddled with exclusions. For example, it may not cover you for any calls made when your equipment is lost or stolen.
You must also make sure you comply with the insurer's conditions, otherwise the policy will not pay out – for instance, if your phone is stolen you must bar it and contact the police for a crime reference number.
Also bear in mind that if you opt for a mobile phone contract and insurance through an intermediary such as Phones4U or Carphone Warehouse, it is crucial that when you renew your contract with the mobile phone provider and take out new cover, you cancel the original insurance. If not, you run the risk of unwittingly paying for insurance for several years and often, for a mobile phone that you no longer own.

Home insurance

If you have home contents insurance, it is possible that your mobile phone is covered so check with your insurer. If you are not covered it may be possible to ensure that you are by paying an extra premium, typically around £23-£35, and opting for personal possessions cover. This will apply to items lost, damaged or stolen outside the home.
However, it is worth bearing in mind that your excess may be quite high, perhaps even more than the cost of the handset itself, so such a provision within your home contents insurance may not be suited to claims for mobile phones. Your home insurance cover may appear to be the cheaper option in the short term, but Peter Harrison from pointed out that making a claim may end up costing you more than the cost of the replacement handset as insurers hike your future premiums.
"Unlike a stand-alone mobile phone policy, with home insurance there is a no-claims discount (NCD) to forfeit and this can increase premiums when your cover is up for renewal," he said.
Mr Harrison added that it is a common misconception that it is the size of the claim that affects a NCD when, in reality, it is the number of claims that insurers consider when calculating premiums.

Packaged accounts

Millions of UK mobile users could be unknowingly paying twice to insure their handsets, as their devices may already be covered through a packaged bank account.
According to figures from Defaqto, 74pc of these types of bank account include mobile phone insurance, but the policies and level of cover may vary.
Before you make a choice on a new policy, it is always worth checking the star rating from Defaqto (, which analyses the quality of financial products to help you find one that best suits your needs.
For example, if you are looking for a basic level of insurance cover, you may want to consider a product with one or two stars. If, however, you are looking for a higher level of features included within your cover opt for something more comprehensive and with a higher star rating.
Keep in mind that it is possible to get affordable insurance without compromising on the quality of the cover.
For instance, both Halifax Reward Current Account and Barclays Current Account Plus offer five-star cover, which includes protection against loss, damage and theft on handsets – but prices vary.
The Halifax account will cost you £12.50 a month, compared with the above account at Barclays which only charges £5.
When it comes to a packaged account, mobile phone insurance is often one of the most valuable benefits, but read the small print carefully. Always double check the terms and conditions to make sure you are paying for cover that will protect you for the full price of your handset. With smart phones costing hundreds of pounds, you wouldn't want to come up short.

Stand-alone policies

The most competitive option is typically a stand-alone policy. Not only are premiums cheaper, but you can check that the policy offers exactly what you want.
For instance, Protect Your Bubble ( offers annual cover for an iPhone 4 32GB for just £5.99 a month.
This offers worldwide cover for theft and breakdown, as well as accidental and liquid damage. However, if you lose your phone, it will not be replaced unless you have selected this as an add-on for an extra £1 a month.
Bear in mind that if the mobile phone cannot be replaced with an identical make and model of the same age and condition, the insurer will replace it with one of comparable specification or the equivalent value taking into account the age and condition of the original electronic equipment. This is fairly standard among stand-alone insurers, and for some mobile owners, the cheaper premiums may be worth it.
An added benefit is that with this type of policy, you can also add additional handsets and earn an 10pc multiple item discount. By The Telegraph