Train fares are set to rise by an average 3.4% next month, the biggest rise in five years. Passengers in the north of England will see the biggest hike, with Arriva’s Northern putting up overall prices by 4.7%, and Transpennine Express tickets set to cost 4.6% more.
To cut the cost of your daily rail commute, the best thing to do is to buy a season ticket. Depending on where you are travelling to and from, this could save you almost £1,000 a year. But with the typical annual ticket costing several thousand pounds (assuming you’re commuting from any distance), the next problem is finding the cash to pay for it.
The cheapest way to spread the cost is with an interest-free loan. Many employers offer interest-free season-ticket loans, with your repayments being automatically taken out of your net monthly salary. That way, you get your low-cost travel and don’t even have to think about the repayments.
If your company doesn’t offer interest-free loans, then your next best bet is a 0% purchase credit card. There are loads of 0% deals available at the moment, with Sainsbury’s offering the longest deal at 31 months, but make sure you divide the cost of your season ticket by 12 and clear the debt within that time. Otherwise you’ll still be paying off your 2018 season ticket when it is time to buy your 2019 ticket. The only problem with an interest-free credit card is that your credit limit may not be high enough to allow you to buy an annual season ticket.
Finally, you could try a season ticket club. Groups like MyCommute4Less or Commuter Club buy your ticket for you, and you pay them back in monthly instalments. Commuter Club charges 10.6% APR, while MyCommute4Less charges a 5% fee on the total cost of the season ticket, which works out as the equivalent of 9.5% APR. Just make sure to read the small print, as the company might cancel your ticket if your payment is overdue by a certain period.
What you need to know about self-assessment
If you are self-employed, earn more than £100,000 a year, have a pension income above the personal allowance, or earn more than £10,000 a year from investments, savings or dividends, then you need to file a self-assessment tax return. Be aware that this isn’t an exhaustive list – you can find a comprehensive one online at Gov.uk.
The deadline for filing a paper tax return for the 2016/17 tax year has already passed – for future reference it needs to be in by 31 October – but you still have a few weeks until the deadline for online tax returns. These need to be filed by midnight on 31 January 2018, but if you want HMRC to automatically collect the tax you owe through your wages or pension you need to submit your tax return by 30 December 2017.
Miss the 31 January deadline and you’ll be fined £100 for filing your tax return late. Depending on how late it is, you will also pay a fine for paying your tax bill late. If you pay your bill more than 30 days late, there is a 5% fee, plus interest.
So, if you don’t get around to filing your tax return until mid-February, find out you owe £10,000 and then dither about paying until the end of March, you would owe £10,643 – the extra £643 being made up of the £100 penalty for filing late, plus £500 to cover the 5% fee and £43 in interest.
Fail to file or pay for longer than three months and the penalties really start racking up – a £10 fine for every additional day you are late, plus the 5% fee on late payment of the bill keeps getting added every six months. If you wait until 1 December to file your return and pay your bill, someone owing £10,000 in tax would face a bill of almost £13,000 once penalties and interest are factored in.
In the news this week…
• Hundreds of thousands of people making a bit of extra money on the side are expected to save up to £400 a year thanks to new tax breaks which became law last month, says Vanessa Houlder in the Financial Times. However, be careful – the rules are a little confusing and could trip some people up. Individuals who make up to £1,000 of property or trading income (say by selling items on eBay), no longer need to declare or pay tax, and those who do earn more than £1,000 can make use of the £1,000 allowance, rather than working out their exact expenses.
So, someone selling £1,000-worth of mince pies and making £950 profit can keep it all tax-free and doesn’t need to declare it. However, if they sell £1,001-worth of pies and fail to declare it, then instead of paying tax on just £1, they will pay tax on the full £950. Critics also claim the rules discriminate against the self-employed: a self-employed electrician giving the odd tennis lesson could not use the allowance, but one who is a full-time employee could.
• Good news for savers, says Miles Brignall in The Guardian. National Savings & Investments has reintroduced its popular one- and three-year Guaranteed Growth/Income Bonds after eight years. The one-year Guaranteed Growth bond will pay an interest rate of 1.5%, while the three-year pays 2.20%. For those wanting monthly interest, the Income bonds pay 1.45% over one year or 2.15% over three years. They must be bought online and the minimum investment is £500. Savers who cash in early will forfeit the equivalent of 90 days’ interest on the sum withdrawn.
• An EU directive which comes into force on 13 January will ban businesses from charging customers to use credit cards, says Flora McFarlane in The Sunday Times. At present, retailers, airlines and government departments seek to recoup the 0.2% to 1% they have to pay banks and card providers by adding a surcharge of up to 3% on credit-card transactions. As of 13 January, they are either likely to refuse to accept credit cards at all – which is what HMRC is doing – or try to make up the lost revenue in other ways. However, the DVLA and some local councils contacted by The Sunday Times said they would scrap the fee, but continue to accept credit-card payments.