“It’s the new financial year, spring has sprung, the new Cd is just about launched and it’s time to get back to my finances.

I’m wondering what advice the experts have on bank accounts to suit the self-employed?

When starting off I was always told i needed a business bank account, so I opened one up but I confess I have never actually used it, mainly because it’s at a different bank to my personal account.

Is it really bad to be working all my money just out of my personal account?

As a sole trader are there benefits in having a business account to filter money through before it all starts to go to pay my mortgage and other bills?

Maybe it’s just me being lazy but the thought of having two accounts and having to switch money between them at all time to ensure my mortgage, bills and grocery shopping is still paid for on time just stresses me out!

Also with regards to bank accounts overall, I have a personal bank account, a savings account and an ISA, all at the same bank. Is there any harm in that, or should I be shopping around for things like ISAs at different banks?

Is it good to have your accounts at different banks or is it just fine to always be with the same bank?”

Lots of questions there so let’s have your views before we ask our panel of experts to help us out.

The conversation went downhill from there and included phrases like “What do you want me to do,” “What do you expect me to do about it” and “No I can’t give you my surname”.
What. Even after I’ve told you my full name, account number, shoe size, mother’s maiden name and the name of every goldfish I have ever owned. What happens if there is more than one Mary in your global operation?

It finished with that well-worn phrase from me “Can I please speak to your manager?”

Compare that with my call last night to British Gas Homecare. I had a visit from an engineer yesterday to repair my tumbler dryer. It seemed to be working but now my washing machine wasn’t. He’s been a few times already, to assess the damage and to bring and fit a spare part. The girl I spoke to couldn’t have been more helpful. She upgraded the call to priority to expedite a new visit and then called the engineer who had visited to ask if he would call me to see if we could find an easy solution. He called – even although it was 9pm and agreed to visit first thing this morning before he started his work for the day.

Two companies, two very different conversations. From the beginning of the call from my Bank I felt as if I was fighting them – even although they were supposed to be helping me by preventing my card being used fraudulently.

British Gas, on the other hand, couldn’t have been more helpful. Their objective was to make sure my washing machine worked, and the girl I spoke to did everything she could, and more, to ensure that happens.

I know which conversation left me more satisfied.

But why the difference? Does British Gas only employ friendly helpful staff while my bank employs only surly unhelpful people? Does my bank need to look at its training programme in customer service? Does British Gas care more about what its customers think than RBS?

Or is it simply that I spoke to one person when she was having a good day and the other on a bad day?

And if that’s the case, should it be? What standards should I expect from companies that are providing me with a service?

Here’s a selection of your questions and comments from the last time we tried this:

Q. I have a question on the link between child benefit and the state pension. At the moment it is my understanding that a person receiving child benefit receives NI credit towards the 30 years required for a full state pension. As you know the child benefit will be removed for the person receiving child benefit if her husband/wife is a higher rate taxpayer- this seems unfair to have the wife/husband penalised in retirement for the spouse’s income. It may even be that when the carer retires she/he is not even married to the same person but has been penalised- do you know if that is the case- if so Money sucks!!

A. Good question David. My initial response would be that it’s not as simple as saying that someone receiving child benefit will automatically receive NI credit towards the 30 years required for a full state pension. There are other requirements that need to be satisfied before receiving NUI credit and these other requirements will vary from person to person. To be on the safe side I have asked the Department of Work and Pensions to look at your question and come back with a fuller answer so hopefully I’ll be able to get back to you soon. I know that there is a large scale review of the benefit system going on at the moment and it may be that any answer from DWP will reflect that but I should be in a position to answer you more fully next week.

Colin Kennedy asks a question about renting out a room in his property:

Q. I work in Crawley during the week but live in Scotland at weekends. I have a second home in Crawley and I rent out 3 rooms. I have a business which is dormant, but could I use this business as a vehicle to purchase my house in Crawley and rent it out to my tenants and myself? What benefits would I derive from this? Love the website and looking forward to your insight!

A. You could certainly use your business to purchase the property that you already own and then rent it out to others although presumably your business, if it is dormant, will not have the required funds and so effectively you would need to look at the transfer of the property to company ownership rather than your own unless your business can raise the funds to purchase the property from you.
Either way the first issue for you is that you are personally disposing of the asset and may be creating a capital gains tax liability for you since it is not your main residence.
Whether it makes sense for you or the company to own the property is in no small way dependent on your tax position. If you own the property then any rental from your tenants, after deduction of allowable expenses, will potentially be taxed at your highest rate. If the company owns the property then any profit will be liable to Corporation Tax but you may decide to retain the rest in the company until you need it. This avoids any further personal tax but means that you can’t use the money.
A further complication may be that if you transfer the property to your company, and you are a Director and employee of that company, then you may find that HMRC argue that you living in the property is a benefit in kind and that may have tax implications for you.
I hope you find this information useful but please come back to me if you have any further queries.

Jack Fraser asks an ISA question:

Q. I am the student who asked about the pension, but I would like to answer just another quick question on a different matter! If I use up my full £5100 cash ISA allowance with cash this tax year, does any interest gained on that count towards the allowance i.e. if I gained £4 and it went up to £5104 because of interest would I be exceeding the allowance?

A. Very simple answer to this question – no! The allowance relates to cash invested in the ISA – whether Cash ISA or Stocks and Shares AIS and any interest or growth in the value of your ISA won’t mean that you are exceeding your allowance, or eat into the next year’s allowance either.

Margaret Cunningham has come into some money and wants to know what to do with it.

Q. I have just inherited £22,000. The money is sitting in the Royal Bank of Scotland at the moment. Can you give me some advice how I should invest it, please?

Thanks and greetings from Germany

A. The answer to this one could go on forever and depends on so many different questions that I don’t know the answer to at the moment. These questions would include, in no particular order of importance:

Are you living in Germany and is the money in Germany or the UK?

Do you have debt that you could do with paying off?

How long will it be before you need the money?

How much risk do you want to take with your investment – are you an under the pillow type or is the 2.30pm at Cheltenham more your style?

Do you have other investments?

Could your pension do with a boost?

What is your income tax position?

So as you see it’s not an exact science. And these are only a sample of the questions you would want to consider before making a decision. The starting point is to examine your current situation and for you to decide what it is you would like the money to do for you. If you have any debt – mortgage or non-mortgage – then it might makes sense to pay that off since it might be costing you more in interest than you will receive on money you invest. If you have no debt and you want to put it away somewhere for a ‘rainy day’ then it would be a case of looking at how to do that tax efficiently and with a level or ‘risk’ that is acceptable to you and for a length of time that suits.

And Cathy Austin has a question on the finances of long-term care.

Q. I saw the piece you did on financial advice on long-term care on BBC the other night. My father is in a care home in Scotland. He pays his care-home fees from his “savings” (house sale!) The bank manager told us that it is possible for him to gift £3000 to each of his children & £1500 to each grandchild, each year, which would obviously reduce his capital, without the authorities being able to question this. Do you know if this is the case? We don’t want to do anything dodgy, just want to know if this is correct.

A. Maybe is the perhaps unhelpful answer! The £3000 and £1500 limits that your bank manager talked to you about are the maximum amounts that can be ‘gifted’ to children and grandchildren annually so that they don’t form part of your father’s estate for inheritance tax purposes – and there is often confusion about the rules on Inheritance Tax and the rules that apply to care issues. The local authority is not interested in IHT rules, only that your father hasn’t given money away to ‘deliberately deprive’ his estate to save him paying for his own care. So whether your dad gifts his children £3000 or £30,000 the local authority might want to know why. It may do his case no harm if he is able to explain that it is part of a tax planning exercise.

I know that we promised that Moneysucks? would be jargon-free but the difference in the two terms above is crucial and has left many a shopper frustrated because they think they might have missed out on a bargain.

The legal distinction between the terms is important in a couple of situations but the one that concerns us here is when you see the biggest and most expensive diamond ring in the shop advertised in the window at what looks like a real bargain at £300.00.

Your credit card is out of your purse or wallet in a flash as you rush to buy it before any other passer-by steals it from under your nose. 

Then the hammer blow. “Sorry, we’ve put the wrong price tag on that. It should be £3000 not £300”.

But you’re not put off as you tell the Manager that you know your consumer law and you’re sure that if the shop advertises the ring at £300 then they are making you an offer and they have to honour that offer and sell it to you at £300.

“Sorry”, you’re told. “It wasn’t an offer, it was an invitation to treat”.

And you know what? They would be correct. The retailer is not ‘offering’ to sell you the goods in the window at the price marked, merely ‘inviting’ you to enter into negotiations for them. So the ‘invitation to treat’ is like a bit of ‘foreplay’ that precedes the offer and so doesn’t form part of the process of creating a contract – and if you are a lawyer and there’s a better way of explaining this bit then please let me know!

The bottom line to this one, unfortunately, is that the bargain you thought you were getting wasn’t a bargain after all.  Better luck next time!

Friday 9th – nothing spent
Saturday 10th – £9.44
cleaning products for the house. I bought these from the little shop across the road. If I had gone to a larger supermarket these would have probably been cheaper.
Sunday 11th – £31.00 Petrol and crisps
Monday 12th – nothing spent
Tuesday 13th – £5 on tights (I was wearing annoying tights that day that were always falling down so I decided I needed to go to the shop and buy another pair!)
£2.79 on biscuits and crisps (comfort food to take back to the office!)
Wednesday 14th – £3.00 Hot Cross Buns and Coffee.
I went to the gym in the morning and didn’t have enough time to pack my breakfast so decided to stop on the way to work and get something.
Thursday 15th – Haircut £32.00 Coffee £2.20 Fuel £30
I was trying to hold off to get my hair cut at the end of the challenge so I didn’t need to include the expense but thought that maybe cheating !
Friday 16th – £4 Parking £4.20 coffee and muffin £7.00 Cider and Smoked Salmon
£25.00 Doc Martin Boots
My downfall is going into charity shops when I am bored and picking up ‘bargains’ found a nice pair of doc martins for £25 so decided I couldn’t leave them. Was also not going to put this in my financial diary as I knew it was an item I didn’t actually need and I was very aware that I have probably spent more than I should have this month.
Ok and now to look at my on line account!
1st March – £24.95 Fitness First
2nd March £12.99 Home Care Insurance
17th March £47.06 T mobile bill
Grand Final Total: £240.63

And now Mary-Louise:

Monday 12th March

I did some shopping for food and toiletries which came to £18.69. I then went out for dinner which came to £7.69.
£26.38

Tuesday 13th March

A day for healthy drinking… a hot chocolate (£1.75) followed later on by a milkshake (£2.80)
£4.55

Wednesday 14th March

A couple of real big spends today – stamps for £1.72 and polos for £0.49
£2.21

Thursday 15th March

Bought some milk and cheese (£3.50) before going out for dinner (again!) which came to £13.00.
£16.50

Friday 16th March

I sponsor a child in Ecuador and that money came out of my account today (£21) and picked up some food on the way home (£5.95)
£26.95

Saturday 17th March

More food shopping (how much do I eat!?) which came to £19.64
£19.64

Sunday 18th March

A friend of mine drove me to a charity race we were running so I gave him £5 of fuel money
£5.00

Week 4 total: £101.23

Week four was fairly middle of the road spending wise. I seemed to be buying food all the time but my cupboards are now very well stocked up. I went out for dinner twice during the week which did add up I also realised just how stupidly expensive milkshakes are in some coffee shops! In total I have spent £741.75. I am fairly pleased with this as it means that I am saving a little money every month. However, it does mean that I can’t really afford to be making big spends (e.g. I am starting to reconsider a trip my friend and I are planning to Disneyland Paris…) and expect to be paying off my overdraft. I’ve found this exercise really useful and it has certainly made me think twice about my spending.

We will be chatting to them both next week to discuss what they have learned over the last few weeks, and we’ll all be on Pulse FM in a week or two to talk about the experience, and the benefits of counting what you spend.

Date Item bought Expense Total Comments
Monday 27/02 Petrol £30
Chewing Gum £0.57 £30.57
Tuesday 28/02 Tapas £5.50
Wine £4.10
Hot Chocolate £2.20 £11.80 I have just started back working as a support worker on Tuesday evenings and make around £17 so I basically justified eating out that night due to this! I had enough food to eat in before I left the house.
Wednesday 29/02 Bread
Milk and Chocolate £1.00
£0.85
£1.00 £2.85
Thursday 01/03 Gingerbread Latte

Rent

£2.00

£365.00 I was craving a coffee so bought one in a little coffee shop in Paisley before a meeting I was having.
Friday 02/03 Stuffed chicken breast £5.00 I decided to treat myself to a Marks and Spencers lunch as I was off work today. It was very expensive for the amount of food I actually bought. Not the best value for money!
Iced Buns £2.70 £7.70
Egg, Cheese and Milk £3
Eye Brow Threading £4.00 £4.00 For those who don’t know what this is it is an ancient technique used to shape your eye brows!
Saturday 03/03 Lunch:
Soup and Toast, Coffee and Cake
£7.25 £7.25 Went for a drive to out of town with my friend and we decided to eat lunch out at a little café.
Tip for food £2.00 £2.00 Saturday night was my joint birthday party with my sister. Our parents bought us a meal I contributed the tip
3 x pints of beer £9.00 £9.00 I drank more pints but since it was a birthday celebration many drinks were bought for me this night.
Taxi £10.00 £10.00 I shared a taxi home with my sister and her husband. I had no change so gave them £10. The total by the time I got out was £7. It was a black cab. My flatmates got home later after ordering a private cab and said they had just paid £4.
Sunday 04/03 Food shop £27.64 £27.64 Me and my sister decided to take a Sunday drive to the new Whole food shop in Giffnock. For the amount I paid I really didn’t get many items. This is the first time I have shopped there and I wont be going back in a hurry. Within this price though I bought my Dad’s birthday present.
Car Hoover from E-bay £6.78 My car is looking very dusty so decided to purchase a hoover. I received it the other day but I am sceptical that it will work well due to its low price! I will update you once I have tried it.
Monday 05/03 NO MONEY SPENT !
Tuesday 06/03 Coffee and Apple Juice £2.65 Had two meetings today out of the office so bought a drink both times.
Wednesday 07/03 Petrol £20.00
Sweets .65
Gym Trousers £20.00 I am always at the gym and only have one pair of gym trousers. It was getting annoying so I decided to buy another pair.
CupCake £ 1.50 For my sister
Present for sister £ 7.50
Meal out for my sisters birthday (my treat) £ 35.20 Took my sister out to treat her for her birthday. This total included two cocktails at £6.50 each.
Thursday 08/03 Food Shopping Sainburys £ 16.89 The amount that I got here was loads more than I got at Wholefoods. Definitely better value for money.

GRAND TOTAL:

£652.53

Zoe comments. “Was rather shocked when I saw this total but then remembered my rent is included in this total. Still it seems a lot. I am beginning to think I may spend more money than I bring in! The last week of budgeting and then doing the sums will reveal if this is true. Writing down everything you spend in a month is definitely a challenge just remembering when you purchase something you have to record it is a task in itself. However the task has made me aware that all the little expenses do add up in a month. I think from now on I will think before I spend. I would love to get out of my overdraft and this is only going to happen if I do start to be a little careful with how I spend my money.”

Mary Louise has been slightly less detailed than Zoe, but interesting reading nonetheless. “I’m into the third week of the Money Management Challenge and things have somewhat improved from my first shocking week of spending!
In the second week of the money challenge I only spent £47.82 and was very chuffed with that! It had been on the usual sort of stuff – food, train tickets and odds and ends. I had also been away up in the Highlands for the weekend and I think the lack of any shops beside the co-op curbed my spending somewhat! This week, I’ve had to pay my rent which is my biggest pay out of the month. My rent is £230 and I pay £30 a month for electricity. On top of this I’ve paid an electricity bill and eaten out a few times so I think it might be another expensive week… I’m really looking forward to the end of the challenge to see what I spend in total in a month – I’m beginning to realise it’s more than I thought it was! It’s definitely made me think more about what I can really afford and how I should start looking for a rich husband as soon as possible.”

And lastly Jennifer has spent as follows:

28th Feb – 5th March

This week I have spent £144.18 in the following way.

Make-up: £7.74
Public Transport: £19.40
Food: £12.29
Haircut: £30.75
Hair Products: £9.50
Shoes: £24.50
Spa Day: £40

I have not needed to pay any bills this week and I didn’t need to buy much food. I have treated myself with a spa day, new shoes and a haircut so most of my money this week has been spent on me! I probably won’t be so indulgent now for the rest of the month.

6th March – 12th March

I have spent £357.33 this week which is by far the biggest spending week I will have in the month. I have spent most of the money on my rent but I have still spent a little on myself.

Rent: £250
Travel: £22.10
Food: £19
Charity Donations: £5
Toiletries: £11.23
Eating Out: £10
Drinks: £10
Jeans: £15
Top: £15

I have been less indulgent this week but still had fun at the weekend. I went for a cheaper dinner and treated myself to some new clothes but I didn’t over spend.

They are all finding it to be a really interesting and useful exercise and it will be fascinating to see the totals at the end of the month.

Do you have the guts to be honest about your spending for a month?

Oh yes they can.

It’s one of the oldest clichés trotted out by shop staff when faced with a customer they don’t want to deal with. “I’m sorry, we can’t take that back if you don’t have your receipt.”

But it’s simply not true. The fact is that retailers are not under any legal obligation to provide you with a receipt so it would be rather unfair if they try to insist that you need to produce one when returning goods.

So if you are returning goods beccause they are faulty, and have therefore broken the terms of the Sale of Goods Act, then you don’t need to have a receipt.

You may, however, be asked for proof of purchase and for this you could use a cheque stub or a  bank or credit card statement.

If you are returning goods just because you’ve changed your mind or they don’t fit you then the shop does have the right to insist on a receipt since they are taking the goods back in accordance with their own internal policies rather than because of any legal requirement they have.

Most retailers will allow you to return unwanted goods within a certain time frame – and it varies from retailer to retailer so if you think you may have to return something then ask how long you have at the time you are buying it.

Monday 20/02 Went out for dinner. Dinner itself was £5 and a shandy was £3.50 £8.50
Tuesday 21/02 Two slices of cake to take to my parents £2.50 each £5.00
Wednesday 22/02 Forgot my lunch today so bought water 0.75 and a salad £1.70 £2.45
Thursday 23/02 Loaf of bread £1 and train into town £1.50 £2.50
Friday 24/02 On Friday someone in our office bakes cake I put a donation of £1 in.

Finished work and went immediately to silverburn to try and find a dress for my birthday. I ended up buying a pair of jeans £17.49, then spent £12.35 in superdrug on shampoo and other hair products. Went to a charity shop and bought two cardigans totalling £4.75. I then went to get my fringe cut at the hairdressers for £4. While getting this done I got a £30 parking fee! I then went to the shops and bought some milk 0.79 £70.38
Saturday 25/02 Decided I needed to find a birthday dress, it is tradition to buy a new dress on my birthday. I spent a total of £40.97 in new look on the dress, tights and jewellery.
I then popped into a charity shop on the way home and found 3 dresses that were £2 each I couldn’t resist so that was another £6.
After my birthday dinner that my parents paid for as a gift. I bought some cranberry beer for £5 and then got two taxis to my friend’s house totally £6 £57.97
Sunday 26/02 Me and my parents visited the Polmadie car boot sale where I spent £6.50. I then went home and discovered I had nothing I wanted to eat in the house so I popped over to the shop near my house and bought crackers, flavoured water, butter, Philadelphia this little shopping totalled £7.50 £13.50
Monday 27/02 Filled up my car with £30 petrol and bought some chewing gum £0.57 £30.57

Total: £190.87

Now Mary-Louise:

Monday 20th February I bought my train ticket (£71.50) which lasts for a month and does save money, but is quite a big upfront cost.
Later in the day I went to a carvery for dinner (£8.50) £80.00

Tuesday 21st February I saw a good deal for a cut and colour on groupon so bought that (£25.00)
I’m running in a charity race in March (as a tiger…) so bought my costume too (7.98) £32.98

Friday 22nd February On Friday I bought a train ticket (£2.00), a bottle of mile (£1.30) and a chocolate bar (£0.69). What a mad Friday night that was… £3.99

Saturday 25th February My internet bill came in on Saturday (£10.30) and I then went into town to get some food shopping (£16.74), some cosmetics/toiletries (£12.00) and some rewriteable CDs (£9.99). In the evening I took a train to my friend’s flat (£1.30) and bought a bottle of wine on route (£4.99). £55.32

Sunday 26th February To save money (ha!) I bought a train ticket in advance for when I go to Dundee in a couple weeks time (£16.05). I also paid the entrance fee for the race I’m doing in March (£45) and lastly sponsored a friend who is raising money for Cancer Research (£30.) £91.05

Total: £263.34

Mary-Louise satys of her spending “It’s only one week into the money challenge and I was more than a little bit shocked when I added up how much I had already spent. In my defence, I had had some unavoidable costs such as bills… but I had also spent quite a lot of money on chocolate, make-up and socialising! My spending at the weekend was about double what it had been the entire week, I think mainly due to the fact that I had the time to go shopping, meet friends and eat large amounts of chocolate. I think that this first week did have quite a high number of ‘big’ costs (e.g. bills, food shops, travel tickets) and that hopefully, in weeks to come, my spending should even out. Otherwise I might be in trouble! Also, Zoe is beating me right now and that is very upsetting.

Zoe noticed a big difference between her spending during the week and that at the weekends, and is going to check her bank balance this week to see what other money is being spent for her. “I have been doing the money challenge for a week now. I have found there to be a big difference between my spending habits during the week compared to the weekend. During the week I don’t actually spend that much money my biggest expense will be filling up my car and doing a big food shop. I am in the habit of taking my lunch to work with me, so after the one off big expenses my day-to- day costs during the week are very small. Then the weekend hits. It was my birthday weekend so I ended up doing a lot of shopping. I needed a new dress for my birthday dinner and of course alongside the dress I needed jewellery! On Friday I am ashamed to say I got a parking ticket for £30. That was annoying expense that I didn’t expect. So all in all with shopping and parking tickets I managed to spend over the weekend £131.35 my total during the week came to £18.45. So week two begins my weekly expenditure will be more this week as I need to fill up my car and go do a food shopping. I have realised that to pop to the little shop just over the road from where I live and get groceries is a lot more expensive than going to a big supermarket and since I have a car now it is actually a lot easier to do a big food shopping and I believe this saves me money. Still haven’t checked my bank balance to see expenses that are coming out from my account. I will do that this week and account for these expenses. Week two begins my little notebook remains by my side so that I am able to account for everything I spend. An interesting challenge indeed.”

But we keep hearing stories of agreed facilities being withdrwan, or only being renewed at huge extra costs. And of continuting difficulties for people trying to move house, or buy their first property.

On top of that the banks are still not paying decent rates of interest on many of their accounts and millions of us haver money floating about in accounts paying no interest at all.

We own many of the banks, or so we’re constantly being told. Should we not expect better of them?

What’s your experience of our Banks.

Are they lending eonugh money, and quickly enough? And if not how do you think we should get them to increase their lending?

Tell us what you think.

We’ve decided not to get involved in that argument right now.

That might sound like a bit of a cop-out, and in a way it is. But that is only because there is another point that is sometimes missed out in this ongoing debate about the future of property values. Whether prices rise or fall, and whether you make money or lose money, you need a roof over your head. And if more of us thought about that rather than how much money we were going to make out of the buying and selling of our houses, then perhaps the many answers that the pundits are giving to the question over the future of property prices will be less relevant.

Your house can either be somewhere to live, in which case it’s your home, or it can be for investment, in which case it can provide an income or some cash when you sell it.

It can’t be both!

If you continue to live in it it’s your home not an investment and if you don’t live in it because it’s rented, or because you sell it to realise the capital you have tied up in it, then it might be ‘your house’ but it certainly won’t be your home!

I know, this is becoming a circular argument. But it is an important one. Huge rises in property prices over the last couple of decades have meant that more and more of us are taking this ‘property can’t fail’ line to justifying not having a good mix of investments, or more importantly as an excuse for not making proper arrangements for retirement as in “I don’t need a pension, I’ll just sell my house when I retire.”

Property has been king for years now, and returns from property have outstripped those from most other assets, although detailed analysis will show that timing could have a major impact on your profit.

Now I happen to think that property can be effectively used as part of a well structured plan for retirement. But it generally only works if it’s a second or third property purchased specifically for rental with no requirement for you to have to live in it yourself.  The ease with which mortgage money could be obtained up until a couple of years ago flooded the market with amateur landlords who thought there were quick bucks to be made from buying and selling flats up and down the country.

There is still money to be made from the property market if you’re looking to but for rental, but generally only as part of a longer term strategy, and generally still only if you are borrowing to help fund a purchase, and effectively using someone else’s rental to build up your capital.

For those of us with one property that we live in, we should start to enjoy it as such, rather than worrying about how we can ‘maximise our profit’ when we sell!