As students leave college already weighed down by the burden of student loans to repay and enter the working world with all of its financial and legal traps and temptations, it is more important than ever that they understand the most important facts of personal finance and employment rights. This is guide for young people going to University or starting work for the first time. 

Many young people have little or no idea about basic financial and related matters, such as how credit cards, bank accounts and overdrafts actually work (and consequently run the risk of paying much more in interest and charges than they ought). Nor do they always understand exactly what they are doing when they sign a contract of employment etc, why it is important to start saving early, what a mortgage really is and how the various types differ. This book addresses those issues and more on pensions planning and income tax.

Contents

Dedications iii 

Acknowledgements iii 

About the authors v

Foreword  vii

Contents ix

Preface xix

PART ONE: MONEY     1

1      Handling money    3

1.1        Current accounts. 3

1.1.1          Who offers current accounts?. 3

1.1.2          Depositing money. 3

1.1.3          Drawing money out 4

1.1.4          Direct debits and standing orders. 6

1.1.5          Paying bills. 7

1.1.6          Overdrafts. 8

1.1.7          Charges and interest 10

1.2        Deposit accounts. 10

1.2.1          Special terms. 10

1.2.2          Stockmarket-linked accounts. 11

1.2.3          Demutualisations. 13

1.3        Loans and credit 14

1.3.1          Secured loans. 14

1.3.2          Unsecured loans. 16

1.3.3          Student loans. 16

1.3.4          Credit cards. 17

1.3.5          Comparing sources of credit 19

1.3.6          Credit standing. 20

1.3.7          Getting into debt 20

1.3.8          Bankruptcy. 21

1.3.9          Restructuring debt 22

1.4        Scams. 23

1.4.1          Emails. 23

1.4.2          Phishing and Hoax Websites. 24

1.4.3          Share scams. 25

1.4.4          Role of the Financial Services Authority. 26

2      Savings and Investment 27

2.1        Why save?. 27

2.2        Now or later?. 28

2.2.1          Striking the balance. 28

2.2.2          The sooner the better. 29

2.3        Savings objectives. 30

2.3.1          Short term... 30

2.3.2          Medium term... 31

2.3.3          Long term... 31

2.3.4          Deciding your savings objectives. 31

2.3.5          Effect on savings options. 31

2.3.6          The effect of inflation.. 32

2.4        Lump sum investment 34

2.5        Asset classes. 35

2.6        Cash deposit 36

2.7        Fixed interest securities. 37

2.7.1          Types of fixed interest securities. 38

2.7.2          Influences on price. 39

2.7.3          Buying fixed interest securities. 41

2.7.4          Advantages and disadvantages. 41

2.8        Equities. 42

2.8.1          Returns for investors. 43

2.8.2          Share perks. 44

2.8.3          Influences on price. 44

2.8.4          Buying shares. 46

2.8.5          Investing via funds. 47

2.8.6          Preference shares. 47

2.8.7          Advantages and disadvantages. 48

2.9        Property. 48

2.9.1          The owner occupier. 49

2.9.2          Tenure. 50

2.9.3          Buy to let 51

2.9.4          Commercial property. 52

2.9.5          Factors affecting residential property prices. 52

2.9.6          Buying property. 53

2.9.7          Advantages and disadvantages. 54

2.10      Risk and reward. 54

2.11      Acceptance of risk. 56

2.11.1        Personal attitude. 57

2.11.2        Timescale. 58

2.11.3        Certainty of objective. 58

2.11.4        Other resources. 58

2.11.5        Other people’s money. 59

2.11.6        Past experience. 60

2.12      Past, present and future. 60

2.13      Reviewing your portfolio. 61

2.13.1        Gains and losses. 61

2.13.2        Taxation.. 62

2.13.3        Costs. 62

2.14      Borrowing. 63

2.14.1        Borrowing to invest 63

2.14.2        Repaying borrowing. 63

2.15      Tax efficiency. 64

2.16      Do I need advice?. 65

2.16.1        How do I find an adviser?. 65

2.16.2        Does my adviser need to be independent?. 65

2.16.3        Are advisers regulated?. 66

2.16.4        Do I have to pay for advice?. 66

2.16.5        What if I have a complaint?. 67

3      Investment products  69

3.1        Introduction. 69

3.2        Deposits. 69

3.3        National Savings and Investments. 70

3.4        Individual Savings Accounts. 70

3.4.1          Investment Components. 71

3.4.2          Mini- and maxi-ISAs. 71

3.4.3          Investment Limits. 71

3.4.4          Tax Advantages. 72

3.4.5          Using ISAs. 73

3.4.6          Changes in 2008. 74

3.5        Unit trusts and collective funds. 74

3.5.1          Background.. 74

3.5.2          The range. 75

3.5.3          Choosing a unit trust 76

3.5.4          Ethical investment 77

3.6        Savings. 78

3.7        Life insurance policies. 79

3.8        Pension arrangements. 79

4      Insurance products  81

4.1        Personal insurances. 81

4.2        Life insurance. 81

4.2.1          Do I need life insurance?. 82

4.2.2          How much do I need?. 83

4.2.3          What about State benefits?. 84

4.2.4          Term insurance. 84

4.2.5          Whole of life insurance. 85

4.2.6          Endowment policies. 86

4.2.7          Joint life policies. 87

4.2.8          Medical underwriting. 88

4.2.9          Non-disclosure. 89

4.2.10        Financial underwriting. 89

4.3        Other personal insurances. 90

4.3.1          Income Protection Insurance (IP) 91

4.3.2          Accident, Sickness and Unemployment cover. 93

4.3.3          Payment Protection Insurance. 93

4.3.4          Critical Illness Cover. 93

4.3.5          Private Medical Insurance. 95

4.3.6          Underwriting. 96

4.4        Property insurance. 96

4.4.1          Contents insurance. 96

4.4.2          Buildings insurance. 97

4.4.3          Average. 98

4.4.4          Motor insurance. 99

4.4.5          Loss adjusters. 101

5      Buying a home  103

5.1        Introduction. 103

5.2        Property ownership. 103

5.2.1          Joint ownership.. 104

5.3        The process. 105

5.3.1          Finding a home. 105

5.3.2          Deciding to buy. 106

5.3.3          Higher lending charge. 108

5.3.4          Exchange and completion.. 108

5.3.5          Home Information Packs. 109

5.3.6          Stamp Duty Land Tax. 110

5.4        Costs involved. 111

5.5        Mortgages. 111

5.5.1          Interest rate options. 112

5.5.2          Flexible mortgages. 113

5.5.3          Islamic mortgages. 114

5.5.4          Repayment or interest only?. 114

5.6        Protection alongside a mortgage. 116

5.6.1          Life insurance. 116

5.6.2          Other protection.. 116

6      Other money matters  119

6.1        Effect of change. 119

6.2        Coming into money. 119

6.3        Internet auction sites. 119

6.4        Charitable giving. 121

6.5        Employment benefits. 121

6.6        State benefits. 122

6.7        Do I need a will?. 122

6.7.1          Making a will 123

6.7.2          Intestacy. 123

7      Tax  125

7.1        Income Tax. 125

7.2        Other Forms of Tax. 128

7.2.1          Value Added Tax. 128

7.2.2          Capital Gains Tax. 129

7.2.3          Inheritance Tax. 130

7.2.4          Stamp Taxes. 131

7.3        National Insurance Contributions. 131

7.4        Personal Service Companies. 133

7.5        Taxation of termination payments. 134

7.6        Tax forms and tax codes. 136

7.6.1          P45 and P46. 136

7.6.2          P60. 137

7.6.3          P11(D) 137

7.6.4          Tax code. 137

8      Pensions  139

8.1        What is a pension scheme?. 141

8.2        Defined contribution pension schemes. 143

8.3        Defined benefit pension schemes. 145

8.4        Early and late retirement 148

8.5        Death Benefits. 150

8.6        Member Nominated Trustees. 151

8.7        Tax advantages of pension schemes. 153

8.8        Discrimination and pension schemes. 155

8.9        Stakeholder Pension Schemes. 157

8.10      How do I join a pension scheme?. 158

8.11      What happens if I change jobs or want to leave a pension scheme for some other reason?  159

8.12      Pensions and Divorce. 163

8.13      Can my pension rights be taken away from me?. 164

8.14      Can my occupational pension scheme be changed?. 165

8.15      What if my pension scheme “fails”?. 166

8.16      What if I have a complaint?. 167

8.17      The Pensions Tracing Service. 169

8.18      Who is the Pensions Regulator?. 170

8.19      The State Pension Scheme. 170

8.19.1        The Basic State Pension.. 171

8.19.2        The State Second Pension.. 171

8.19.3        Contracting-Out 171

8.19.4        The Pensions Credit 172

8.19.5        The Over 80 Pension.. 173

8.20      The Future. 173

 

 

 

PART TWO: WORK   175

9      Jobs  177

9.1        The job life-cycle. 177

9.2        Contractual Issues. 179

9.3        The tests. 180

9.3.1          The Multiple Test 181

9.3.2          The Mutuality of obligation test 182

9.3.3          The Tax Test 183

9.4        Employment Status Checklist 184

10    Rights and obligations at work  185

10.1      Employment Contract 185

10.1.1        Statutory Written Statements. 185

10.1.2        Express Contractual Terms. 186

10.1.3        Specific express terms. 186

10.1.4        Implied terms. 188

10.2      Employees’ obligations. 189

10.3      Employers’ obligations. 190

10.4      Minimum wage. 190

11    Discrimination & harassment at work  193

11.1      Gender and Race Discrimination. 193

11.1.1        Marital Status. 193

11.1.2        Discriminatory grounds: sex, race, colour, nationality, ethnic or national origin   194

11.2      Direct discrimination. 194

11.2.2        Indirect discrimination.. 196

11.3      Bullying. 197

11.4      Disability Discrimination. 198

11.4.1        Meaning of disability. 199

11.5      Sexual Orientation; Religion or Belief 200

11.5.1        Sexual orientation.. 200

11.5.2        Religion and Belief 200

11.6      Age. 200

11.7      Defences to Discrimination Claims. 202

11.7.1        Genuine occupational qualification.. 202

11.7.2        Justification in Disability Discrimination claims. 203

11.8      Remedies – what can I get?. 203

12    Family rights  205

12.1      Maternity rights. 205

12.1.1        Ordinary maternity leave (OML) 206

12.1.2        Unfair dismissal and protection from detriment 206

12.1.3        Additional maternity leave (AML) 207

12.1.4        Statutory maternity pay. 207

12.2      Maternity Rights Checklist: 208

12.3      Paternity leave. 209

12.4      Parental leave. 210

12.5      Flexible Working. 211

12.5.1        Grounds for refusal 212

12.5.2        Time off to care for dependants. 212

12.5.3        Part-Time Workers- a case for special protection.. 213

13    Pay discrimination?  215

13.1      What is equal pay?. 215

13.2      Bringing an Equal Pay claim.. 215

13.3      Like work. 216

13.3.1        Genuine Material Factor Defence. 216

13.4      Putting right the wrong? - remedies for equal pay. 217

14    Dismissal and Redundancy  219

14.1      Distinguishing wrongful and unfair dismissals. 219

14.1.1        Expiry of a fixed-term contract 220

14.1.2        Frustration.. 220

14.1.3        Mutual consent 220

14.1.4        Dismissal with notice. 221

14.1.5        Dismissal without notice. 221

14.2      Resignation. 221

14.3      Wrongful dismissal 223

14.4      Unfairly dismissed?. 224

14.4.1        Qualifications. 224

14.4.2        What is unfair dismissal?. 225

14.4.3        Procedures. 227

14.4.4        Automatically unfair dismissals. 229

14.4.5        Remedies. 229

14.5      Redundancy. 231

14.5.1        What is redundancy?. 231

14.5.2        The three-stage test 231

14.5.3        Offer of alternative employment 231

14.5.4        Redundancy payment 231

15    Unions  233

15.1      Trade union rights. 234

15.2      Collective agreements. 235

15.3      Trade union recognition. 235

15.4      Consultation at work. 237

15.5      Industrial Action. 238

16    Employment Tribunals  241

16.1      Employment Tribunals. 241

16.1.1        The organisation of Employment Tribunals. 241

16.1.2        Procedure. 241

16.1.3        The Hearing. 243

16.1.4        Representation.. 243

16.1.5        Costs. 244

16.1.6        Reviews and appeals. 244

16.1.7        Remedies. 244

16.1.8        Reasons. 245

16.2      Employment Appeals. 246

16.2.1        Time limits. 246

17    Human rights  249

17.1      The European Convention on Human Rights. 249

17.1.1        Relevant articles. 249

17.2      Incorporation of the European Convention on Human Rights into UK law   250

17.3      Key provisions of the Human Rights Act 251

17.3.1        New cause of action against public bodies (section 6) 251

17.3.2        Role of UK Courts and Tribunals. 251

17.3.3        Interpretation of legislation.. 252

17.3.4        Declaration of incompatibility. 252

17.4      Most commonly encountered articles in the workplace. 252

17.4.1        Right to respect for private and family life. 253

17.4.2        Right to freedom of expression.. 253

17.4.3        Right to peaceful assembly and freedom to associate. 254

17.5      Remedies. 254

Appendix 1: Useful sources  256

Appendix 2: Further Information  261

Index  265