LOCATING SOME EXTRA CASH
Most of us don’t know how much we’ve actually got and aren’t making use of financial options.
If lack of funds is a major obstacle to a plan or project that would mean the world to you, first make sure you really don’t have any financial slack. Many of us do, without even realising it. Says women’s financial adviser Miss Lolly, who has helped hundreds of women get a handle on their finances, “People often assume bad news when it comes to their money and it usually isn’t the case at all. Most people don’t know what they’ve got and you may well get a pleasant surprise when you look at your situation more closely”.
A forgotten pension, an old endowment policy or an ancient premium bond could be the answer to your prayers. Says Lisa: “When you’ve had 30 years of bad filing habits there are often policies lurking that you didn’t know about or forgot you had. Once you put together all the bits and pieces you may find you have more than you realised”.
Here are a few financial options worth considering:
Check through your filing cabinets. “You could have an old endowment policy that actually has value. Admittedly some haven’t performed well but others have done brilliantly – so don’t assume the worst. And go through your employment history to see if you can unearth a pension or two you’d forgotten about. It could be worth as much as £30K – enough to start a business with some left over,” says Lisa.
There are millions and millions of pounds worth of pensions and premium bonds that go unclaimed. If you’re not sure what you have or have lost the documentation there’s a government pension tracing service at https://www.gov.uk/government/news/new-pension-tracing-service-website-launched. If you’ve lost your premium bond number or documents you can get replacements at https://www.nsandi.com/i-have-some-premium-bonds-i-have-lost-my-documents-or-holder’s-number.
Speak to your parents
It’s a tricky conversation to have, but if you’re lucky enough to still have parents and they plan to leave you a legacy, they may prefer to give you some of your inheritance now. Waiting until they’re no longer around could mean much of it being lost in inheritance tax. “Your parents can gift you a £3k lump sum, plus the same amount for the previous year if they didn’t gift it to you then. So you could receive £6K without any consequence for inheritance tax whatsoever. They could in fact gift you more but if they both died within seven years of the date of the gift you’d then be liable for inheritance tax,” says Lisa.
Look for a silent partner
A close friend or family member may be interested in stumping up some cash to get you started in the business, becoming your business partner. Being a silent partner would mean they’re not involved in the day to day running of your business or endeavour but would get a proportion of the eventual profits. Needless to say, trust and clarity are essential in such a relationship, as is taking legal advice and drawing up a contract so you both know where you stand.
Take a chunk out of your pension
If you want to make a major life change that you feel confident is going to reap rewards, you can take as much as 25% of your pension tax-free after the age of 55. “See it as investing in yourself,” says business strategist and founder of London accountancy firm FUSE Accountants, Faye Watts: “Seek the advice of an Independent Financial Adviser to find out if you can take any further sums from your pension or any other investments. Make sure you also plan for the future though!”
It’s no longer the case that mortgages have to end at 65 – which means remortgaging could well be an option to release the funds you need. “Lenders are much more open to extending” says Faye. “You could also potentially halve your monthly payment just by remortgaging onto a better rate”.
FOOD FOR THOUGHT
“Women tend to be 100% or not at all when it comes to financial resources. You may think you need £20k to retrain or open a new business, but could it be done in stages? Start off with an imperfect version and gradually add to it,” says Lisa. And before you launch yourself into anything major, go to an Independent Financial Advisor to go through what the options are. “Most IFAs will give you an hour of their time for free, so see if any of your friends can recommend one” she adds. Making these decisions on your own can be dangerous, so do take some advice. “A good accountant can help you see the bigger picture and tell you what you need to know from a business perspective, whereas an IFA will tell you what you need to do from a personal perspective,” says Faye. So make sure you speak to one or both.
Easy ways to improve your cashflow if money is tight
Faye Watts reveals how to find a little extra.
Utilise your home
Rent a room in your home to a lodger. This could be a student or professional who just wants to be in the area Monday–Friday, leaving you in peace at the weekend. Your household could earn up to £7,500 tax-free for renting a room in your home under the Rent-a-Room scheme. You could also let your home out to a film crew (there are specific websites that can run this for you), or let a parking space on your drive.
Sell personal belongings
The sale of your personal belongings (known as chattels) may be tax-free so if you are considering selling your guitar, vintage clothes or family heirlooms on ebay, Vinted, Schpock or other auctions, you may be in for a pleasant surprise. But do take advice about any high value items, particularly those above the tax-free chattels threshold of £6k.
Draw down on your mortgage
If you are lucky enough to be sitting on high value property that’s mortgage free or with a low mortgage, you could be in a position to draw down on a mortgage to release some cash. Be aware of some of the risky equity release schemes out there and do take professional advice. Make sure you have enough income to meet the repayment as you could lose your home if repayments are not maintained.
Consider a side hustle
How about taking on some freelance work? It’s easy to register with HMRC as self-employed and you have to do a Tax Return each year if you are. But you can earn £1k of hobby income tax-free. Take advice if you are unsure of the rules. Look at your skills, ask for the advice of friends to be clear on your abilities and work to what you have to offer.
Become a mystery shopper
There are plenty of sites you can sign up to in order to reap the benefits of mystery shopping, which may include a fee as well as the value of your shopping. And don’t forget to maximise any cashback offers and/or discount codes when you are shopping for yourself