The Salary Calculator

The UK bills comparison

by Madaline Dunn

When analysing how expensive it might be to live somewhere, people often overlook factoring in council tax and bills, which can be pretty big extra expenses after rent.

Some locations will even see you forking out as much as £2,078 a year when it comes to council tax. Meanwhile, across the UK, annual utility bills can reach as high as £2,416. So, the cost of running a home can really add up!

So, just how expensive can expenses get, and where can you move to avoid these prices? At The Salary Calculator, we’ll walk you through:

• What council tax is and why it fluctuates
• Which locations are the cheapest and most expensive for council tax
• Where you can find the lowest utility bills
• Where the most expensive utility bills are located

What is council tax, and why does it fluctuate?

Council tax is paid to your local council and is typically split into ten monthly payments. It goes towards everything from rubbish collection and transport to education services and leisure projects. How much you pay in council tax depends on where you live and the value of your home.

Interestingly, house prices don’t always correlate with council tax though. For example, although Westminster is home to some pretty pricey properties, it also has some of the lowest council tax rates in the UK. This is because these locations’ councils generate large amounts of revenue from alternative sources, such as through business rates and parking fees.

Of course, the locations with lower council tax rates also have fewer outgoings when it comes to expenses. This will largely be informed by the demographic of the area.

Raj Dosanjh, the founder of Rentround.com, commented: “There are multiple facets to how councils formulate how much Council Tax to charge residents, circling around other revenue incomes for the council. Westminster, for example, has an abundance of income from business rates.”

Adding: “Due to the busy high streets in the area, Westminster generated £2billion in business rates in 2019, 25 percent of London’s £8 billion total.”

There could be change on the horizon, though, with the Progressive Policy Think Tank making the case to scrap both council tax and stamp duty, replacing it with a “tax proportional to the value of the property itself.”

This reform, it says, would help to create a “fairer and more progressive” system and address “regional inequality, wealth inequality, and would ultimately build a stronger economy across the UK.”

Where are the cheapest and most expensive locations for council tax?

Council tax rates vary widely across the UK, and there’s a huge difference between living in Blaenau Gwent or Wandsworth.

The UK’s cheapest council tax can be found in:

• Westminster: £828
• Wandsworth: £845
• Windsor & Maidenhead: £1,149
• Na h-Eileanan Siar: £1,149
• Hammersmith & Fulham: £1,196

In contrast, the most expensive council tax is located largely in Welsh boroughs. These include:

• Blaenau Gwent: £2,078
• Kingston-upon-Thames: £2,057
• Merthyr Tydfil: £2,018
• Neath Port Talbot: £1,996
• Harrow: £1,962

Where can you find the cheapest utility bills?

By region, the lowest utility bills can be found:

• Greater London: £775
• South East England: £856
• East of England: £873
• North East: £904

The places with the cheapest average annual spend on utilities (including lighting, heating and hot water) per household include:

• London: £775
• Dartford: £782
• Milton Keynes: £784
• Manchester: £787
• Rochester: £808

Where are the most expensive utility bills located?

Across the UK, the regions with the most expensive utility bills are:

• Midlands East: £914
• South West England: £919
• North West: £948
• West Midlands: £949
• Yorkshire and the Humber: £978

The places with the most expensive average annual spend on utilities (including lighting, heating and hot water) per household include:

• Dumfries and Galloway: £2416
• Llandrindod Wells: £1311
• Galashiels: £1181
• Shrewsbury: £1157
• Carlisle: £1140

Unfortunately, recent reports have revealed that energy bills are only on the up, too! By 1 October, the regulator, Ofgem’s price cap is set to increase by 12% to £1,277 a year for average use. If expert predictions are correct, this will surge to between £1,440 and £1,500 by spring 2022.

Tags: bills, expenses, living costs

A guide to house prices across the UK

by Madaline Dunn

House hunting is exciting and often symbolises a new start, and adventure. That said, it can be somewhat overwhelming reviewing house prices, especially considering that global house prices are rising at the fastest pace since 2005.

According to Halifax, house prices shot up by 10.3% over the last year, with an increase to £287,440 on average!

But, don’t worry, at The Salary Calculator, we’ll walk you through:

• Some of the housing market trends right now
• Whether now is a good time to buy a house
• Where the cheapest house prices are
• Where the most expensive house prices are located

What are some of the housing market trends right now?

For those looking to break into the housing market in the UK, there are a few things you should know. In August, house prices jumped 7.1%, a record high, with more demand for greater space and a trend towards more home-working pinned as the reasons behind increased buyer activity.

In relation to this, following the pandemic, more and more people are looking to move out of cities, and now there is reportedly greater demand for rural areas. A survey from Royal London revealed that when movers were asked about their ideal living locations, 46% of Londoners said rural areas, while this figure was 45% in Manchester and 42% in Liverpool.

Andrew Asaam of Halifax said: “It’s clear from speaking to our mortgage customers that many have prioritised space over location as a result of more time spent at home over the last year and a half. We’ve seen evidence of this in areas right across Britain, with house price growth in the vast majority of cities now being outstripped by increases in their surrounding areas.”

Is now a good time to buy?

According to the experts, house prices are pretty pricey right now, and there’s been a month-on-month increase in price. Nationwide House Price Index found that in August 2021, the average house price stood at £248,857, which was 2.1% higher than in July. Demand is also high, meaning there’s a bit more competition.

Robert Gardner, Nationwide’s Chief Economist, says demand is likely to remain solid: “Consumer confidence has rebounded in recent months while borrowing costs remain low. This, combined with the lack of supply on the market, suggests continued support for house prices.”

Meanwhile, speaking to Woman and Home, Chris Salmon, a property expert said that a large price drop is unlikely to happen in the next few months: “For the most part, they will remain largely the same as they are now. Although the Stamp Duty Holiday fully ends at the end of September, only a small amount of properties are affected by that, not enough to see a significant drop in house prices.”

Where are the cheapest house prices?

If you look at the UK by region, some of the cheapest places to buy a house are:

• Scotland: Average house price: £206,359
• Yorkshire and The Humber: Average house price: £207,106
• North East: Average house price: £213,091
• North West: Average house price: £228,307
• East Midlands: Average house price: £250,946

Meanwhile, by city, some of the least cheapest spots to buy a house are:

• Hull: Average house price: £156,424
• Carlisle: Average house price: £163,232
• Bradford: Average house price: £164,410,
• Sunderland: Average house price: £179,567
• Inverness: Average house price:£191,840
• Glasgow: Average house price: £196,625

Where are the most expensive house prices?

In the UK, buying in some of the most expensive regions will cost you an arm and a leg. The South West is now the most expensive region, and experts have largely put this down to the second home market surging.

Across the UK, some of the most expensive regions include:

• South West: Average house price: £430,488
• East: Average house price: £385,420
• South East: Average house price: £441,246
• London: Average house price: £706,267
• West Midlands: Average house price: £264,017

These days there are actually locations in the UK that outdo London when it comes to house prices. Winchester, in particular, was found to be one of the most expensive places to live. There, the average property costs 14 times the average salary. Oxford is not far behind, with a price-to-earnings ratio of 12.4.

The following locations are the most expensive in the UK:

• Winchester: Average house price:£630,432
• St Albans: Average house price: £604,423
• London: Average house price: £564,695
• Oxford: Average house price: £486,928
• Cambridge: Average house price: £482,300

Tags: Economy, house prices, houses, savings

The cost of rent across the UK

by Madaline Dunn

Rent in the UK is on the rise. According to recent figures from HomeLet, the average cost of rent in August reached a record high of £1,053. That’s up 6.9% from last year and 2.3% from the previous month.

Wales saw the highest annual price rise, up 12.8% from last year; meanwhile, the North East saw an annual increase of 5.8%.

So, just how expensive is it to rent in the UK, and what’s causing rent prices to rise?

At The Salary Calculator, we’ll walk you through:

• Why rent prices in the UK are rising
• The lowest rent prices in the UK
• The highest rent prices in the UK

Why are rent prices on the rise?

UK rent prices are on the rise for a number of reasons, including a consistent rise in demand for rental properties. Research from BuyAssociation, in June revealed that a total of 88 prospective private renters were registered per estate agency branch in the UK.

The locations that have seen the biggest increase in demand include the West Midlands and Birmingham, and Yorkshire & the Humber.

The loosening of Covid-19 restrictions, improved job security, and young people moving back out of their parents’ homes have also been pinned as reasons for rent rises.

Commenting on what he thinks is the cause behind the hike, Andy Halstead, HomeLet & Let Alliance Chief Executive Officer, said: “Throughout the Coronavirus pandemic, the Government rightly took measures to protect tenants but didn’t go far enough to balance the protection for landlords.”

He added: “It’s a continuation of the theme that we’ve seen for many years, with landlords being penalised by higher taxes and increased complexity in obtaining possession of their properties. Increased costs for landlords mean increased costs for tenants.”

Where are the cheapest places to rent in the UK?

When looking to rent a property in the UK, a whole host of factors go into decision making, but according to Statista, the most important one for 70% of UK residents is cost.

Saving on rent means that you have more cash in your pocket for the things you love. So what are some of the cheapest rental rates you can secure? By region, these include:

• North East – Average rent: £547 per month
• Yorkshire & Humberside – Average rent: £701 per month
• Wales – Average rent: £702 per month
• East Midlands- Average rent: £704 per month
• Scotland – Average rent: £738

Specifically, the following cities offer the lowest rent prices across the UK:

• Bradford – Average rent: £470.50 per month
• Sunderland – Average rent: £486.50 per month
• Kingston upon Hull – Average rent: £491.56 per month
• Middlesbrough – Average rent: £507.71 per month
• Blackpool -Average rent: £510.25 per month

Of course, London has some of the highest rent prices in the world. That said, there are some locations in London where you can secure slightly lower rent rates. This includes:

• Croydon – Average rent: £1,200
• Barking & Dagenham – Average rent: £1,210 per month
• Bromley – Average rent: £1,250 per month
• Redbridge – Average rent: £1,275 per month
• Hillingdon – Average rent: £1,300 per month

For those looking to keep costs low, according to a report by SpareRoom, Bradford, Middlesbrough, and Sunderland offer some of the lowest rates to rent-a-room:

• Middlesbrough – Average rent: £349 per month
• Sunderland – Average rent: £350 per month
• Bradford – Average rent: £364 per month
• Huddersfield – Average rent: £365 per month
• Liverpool – Average rent: £395 per month

Where are the most expensive places to rent in the UK?

Some of the prices of the most expensive places to rent in the UK will make your eyes water.

The most expensive regions to rent in the UK include:

• Greater London – Average rent: £1607 per month
• South East – Average rent: £1105 per month
• East of England – Average rent: £1005 per month
• South West – Average rent: £948 per month
• North West – Average rent: £799 per month

Aside from London, which is the most expensive city to rent in the UK, some of the most expensive rental rates, according to Thomas Sanderson, can be found in the following cities:

• Brighton & Hove – Average rent: £1,461.00 per month
• Oxford – Average rent: £1,442.80 per month
• Poole – Average rent: £1,251.25 per month
• Bournemouth – Average rent: £1,125.89 per month
• Cambridge – Average rent: £1,112.25 per month

Although renting a room in a house can be a way to avoid paying most of your wage packet to your landlord, there are some locations where renting a room is still pretty steep. For those weighing up their rent-a-room options, some of the most expensive places include:

• Jersey – Average rent: £784 per month
• Twickenham – Average rent: £684 per month
• Barnet – Average rent: £666 per month
• Guernsey – Average rent: £656 per month
• Kingston upon Thames – Average rent: £644 per month

Tags: coronavirus, Economy, houses, rent

Should you register as a sole trader or form a limited company?

by Admin

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A key decision when starting a business is which legal structure do you choose when registering. The three most common options are sole trader, limited company and ordinary business partnership, although most people become a sole trader. Sole traders make up about 59% (3.5m) of the total UK business population of 5.9m, and they include many freelancers, contractors and agency workers.

Ordinary business partnership members make up about 7% (405,000) and basically these are sole traders who go into business together. The UK also has about 2m (34%) active private limited companies. So, why do so many people in the UK who work for themselves operate as sole traders?

What is a sole trader?

Being a sole trader is the same as being self-employed. In law, you and your business are the same thing, which makes you personally responsible for your sole trader business debts. If you don’t build up large debts and your business is successful, this won’t be an issue, of course.

To become a sole trader, you must register for Self Assessment (SA), the system (UK tax authority) HMRC uses to collect tax from sole traders. You’ll then pay Income Tax on your profits during the tax year (20%, 40% or 45% depending on your income/earnings). You work out your profits by deducting your expenses and any allowances from your income/earnings/sales.

Sole trader NICs

Most self-employed people pay their National Insurance contributions (NICs) via SA:

• Class 2 if your profits are £6,515 or more a year (£3.05 a week) and
• Class 4 if your profits are £9,569 or more a year (9% on profits between £9,569 and £50,270 and 2% on profits over £50,270 – all figures quoted are for the 2021/22 tax year).

Declaring sole trader earnings and VAT

Sole traders aren’t required to submit annual accounts to HMRC, but they must maintain accurate financial records (which can be checked) and submit details of their income and business costs in their annual SA100 tax return, which must be filed each year.

If your VAT-taxable earnings/turnover goes over £85,000 a year (the current VAT threshold) or you know they will, you must register for VAT. You’ll then have to charge VAT, collect it and pay it to HMRC. This also applies to limited companies.

The advantages of being a sole trader

It’s very easy to register online for Self Assessment so you can start your sole trader business. There are no costs and the process is very quick (minutes not hours or days). The tax admin is much easier when compared to a limited company, which means it can be done quicker. This saves cost, whether you do it yourself or pay an accountant to do it for you.

The paperwork and financial record-keeping requirements when you’re a sole trader are minimal; completing your SA tax return is more straightforward and any losses you make can be offset against other income.

Many customers won’t care whether you’re a sole trader or not, as long as your prices, products and/or services meet their expectations. In any case, you can easily change to a limited company structure later if you wish. And sole traders can employ others and their businesses can grow and prosper.

Being a sole trader can give you much more flexibility and control over your business, because you’re not answerable to shareholders – and you won’t have to share your profits with them either. You will enjoy more privacy, too, because the annual accounts of limited companies must be published on the Companies House website, which means anyone can view them. Sole traders do not have to publish their annual accounts.

Sole trader v limited company: which is more tax-efficient?

Example 1

Sole trader profit = £50,000 Net income = £38,717

Ltd co profit = £50,000 Net income = £40,109

Difference = £1,392

 

Example 2

Sole trader profit = £100,000 Net income = £67,752

Ltd co profit = £100,000 Net income = £69,469

Difference = £1,717

 

Example 3

Sole trader profit = £150,000 Net income = £91,723

Ltd co profit = £150,000 Net income = £92,057

Difference = £334

 

These examples assume that all profits are extracted from the business, salary up to Secondary National Insurance threshold (£8,840) is taken and the remainder paid as dividends (2021/22 rates).

Conclusion

As the above examples show, operating as a limited company can reduce your tax bill. However, if you need to pay an accountant each month to look after your tax admin and complete your annual accounts and Corporation Tax returns, in reality, any financial advantage as the director of a limited company can be minimal or non-existent.

Each year, hundreds of thousands of people in the UK who decide to work for themselves register as a sole trader and many go on to establish and grow highly successful small businesses. In many ways, being a sole trader is the easier and cheaper choice and it need not hamper your business or your ambitions.

About GoSimpleTax

Income, expenses and tax submission all in one. GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.

The software submits directly to HMRC and is the solution for the self-employed, sole traders and anyone with income outside of PAYE to file their self-assessment giving hints and tips on savings along the way. GoSimpleTax does all the calculations for you so there is no need for an accountant. Available on desktop or mobile application.

Try for free – Add up to five income and expense transactions per month and see your tax liability in real time – at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading and HMRC direct submission.

Tags: Employed and Self Employed, Self Assessment, self employed, self employment, tax return

Social care tax proposed from April 2022

by Admin

The government announced yesterday plans to introduce new social care tax, intended to help reduce the costs incurred when a person goes into care. If the bill passes parliament, this will mean be an increase in National Insurance contributions of 1.25 percentage points from April 2022, to be replaced by a separate tax of the same amount from April 2023. The benefit of this additional tax, in England at least, is that care costs will be capped at £86,000 (less if you don’t have that much in savings / assets). Scotland, Wales and Northern Ireland set their own social care policies, but will receive additional revenue from the tax generated.

The plan has drawn criticism from many who see it is a tax paid by low- and middle-income employees to subsidise wealthy retirees. It also appears to be a break of a manifesto pledge not to raise income tax, National Insurance or VAT – the justification for which, put forward by the government, has been that the pandemic has changed things.

This BBC article has a clear summary of the changes in more detail, as well as a chart showing how much extra tax you’ll pay depending on how much you earn. The bill still needs to pass parliament, but when this and other changes from April 2022 are confirmed, The Salary Calculator will be updated with the latest rates so that you can see what a difference it will make to your take-home pay.

Tags: coronavirus, covid-19, HMRC, income tax, Jobs, national insurance, Pay As You Earn, social care, tax rates