Tax and Inheritance Tax

You have to be earning a certain amount of money to pay tax – but there are certain things that you can do that will help you keep this to a minimum. Checking that your tax code is correct and ensuring that you are getting all the allowances that are due to you would come first. Like the banks, it is not unknown for the Inland Revenue to make mistakes! Completion of your tax return form will also help you to be up to date with this important item and may sometimes even result in a tax rebate! Self-employed people and employees are in different situations and will need different advice on tax matters.


Inheritance tax

Most people think that this will never apply to them but in the circumstances, say, that you have a house that is worth £300,000 with a mortgage covered by a life policy, or if you are employed and have a ‘death in service’ benefit which could pay out £100,000 if you died while you were working - in that scenario there would be £30,000 of inheritance tax for you to pay on your death – a situation which could take you unawares. Some people might consider that it won’t affect them as they won’t be around to be bothered by it! But if we are talking about good stewardship that means that you would want to think about the situation for your heirs and organise your affairs as well as you can rather than doing nothing. A large tax bill after your death is not good stewardship and would result in there being less to pass on to those left behind.

It is well worth taking some qualified advice to see if your estate might be affected by inheritance tax. That is the essence of stewardship – thinking ahead. If you think that your estate might be liable to inheritance tax then you need to make a will - that is definitely a good thing to do.

This series of blogs is based on the annual Stewardship seminar from King's

Good stewardship

Debt is never good - but if you are in debt there are ‘good’ places to owe money and others that aren’t good! You have to look carefully at what is known as the APR on your debt – banks provide a better rate than credit card companies. The percentage you are paying is critically important to the length of time it will take you to pay off the debt otherwise you could end up paying several thousands in interest on a relatively small debt of a few hundred pounds.


Prevention is better than cure and with that in mind at King’s we now provide a Debt Advice Centre called King’s Money Advice. Suzy and Carol Bradshaw head that up and have come to us from Sheffield with a wealth of experience in this vital field of debt advice. They will be a really helpful and important resource for many in debt in our area.

If you are going to prioritise managing your debt you may need careful professional debt advice. Some of the loan companies that advertise in the media that they consolidate debts can result in you paying a final interest rate of 4000%. The so-called lower monthly figure means that the period of the loan is extended - in some cases you can be paying off that ‘smaller’ amount for the rest of your life – or it can seem so. Apart from increasing your income and reducing your expenditure you also need to get the interest rate you are paying down as low as possible. I say again - avoid television loan companies!

This series of blogs is based on the annual Stewardship seminar from King's

Money: who does what...

Who in the family deals with money matters? Is it you? I am a great believer in husbands taking the responsibility for finances but let’s face it – sometimes it’s the wife who is better with numbers and finances! You have to work out how to cover it together, I am not of the view that the man necessarily has to do it but I do think that the man should take ultimate responsibility and ownership, otherwise there can be too much abdication of responsibility to his wife. Don’t be disengaged! Deb and I have made it a long-term practice to work closely together on our finances.


In our marriage, I take responsibility for the ‘Big Picture’ planning but Deb makes the day-to-day decisions. If you are married you should talk through together how you will arrange these things. Deb and I have a joint account for household and family expenses – there should be openness and dialogue between couples around the subject of money and how it is spent. And apart from our joint account we also have personal accounts for which we take individual responsibility.

Next - do you have a good filing system for your documents? This is important in handling money. It doesn’t need to be complicated – a concertina-type box file from W H Smith will do – but you need to have something. I am a Big Picture person, Deb is a details person, so we work well together in a lot of things - she has organised all the filing and keeps it up to date. And it’s a good idea to keep relevant bills and banking documents from past years for up to about 7 years for tax purposes.

This series of blogs is based on the annual Stewardship seminar from King's

Debt: dangers in trying to escape...

Having said early on in this series that I would not be telling anyone what to do, I will now say this to anyone who has a store card - If you would like to bring it to me I will cut it up for you. They are nuts! You are paying 28% to 30% interest on any balances owed on those cards – that’s madness! Such easy credit can lead you into trouble – you need to know yourself and your own level of self-control. Some people make this self-assessment and decide to have only a debit card and then only spend what they have in the bank.


To get out of debt and reduce your expenditure by £100 a month is really going to bite. But in order to pay off your debts, though you have cut back, clearing it can take longer than you think. A plan is essential – ask someone who is experienced and trustworthy to sit down with you to help you put a plan together if you are in that situation. You will have to make some tough choices – generally you will either need to make some more income or you will have to cut back on your spending - or maybe both!

My experience in handling money is that to do so at all well takes time. It takes more time than you think. I would advise that each week you set aside time to deal with your finances. So - in any week, when is your money moment? Sometimes you might need to set aside two hours, other times it could be less. But the important thing is - do not leave things to accumulate. Deal with bills, bank statements or financial matters in the moment otherwise they will build up and will cause you unnecessary worry.

This series is based on the content of the annual Stewardship seminar from King's

The danger of debt...

We have to consider the dangers of debt. For some this is a painful reminder of reality and how difficult it can be to get out of debt because it has to be paid for. If you don’t step in quickly, debt can spiral, so it’s important to open your eyes, take responsibility and plan to get out of debt.

Monthly income - £1580. Monthly expenditure - £1650. Overspend - £70. When I moved from my big salary to a small salary I found that because there are amounts going out all the time it is difficult to know exactly where you are at any point in the month. You can be overspending and not realise for a couple of months if you don’t keep a close eye on things. Let say this pattern carried on for 6 months. At the end of each month you realise the monthly trend but it is steadily going the wrong way - and at this point it starts to touch our emotions because making tough choices to not buy things starts to impact us – and family members. Without clear action, six months later it would be possible to be around £400 in debt. We have had people in our church who have been thousands in debt, some to the tune of tens of thousands, so this example is not unrealistic.

If you are in debt, at this point it is time to decide that you want to do something about it. You don’t want to live like this anymore, but if you have been paying for items on your credit card you now have to pay interest on that debt. By the way, the credit card is the worst way to manage debt because of the high rates of interest that are charged. The cheapest way is to get a bank loan - if it’s possible - or transfer to a 0% rate credit card company who are keen to have your business, and then ensure that you pay off the debt in the relevant period. Otherwise you will be paying somewhere around % for your debt on a credit card. And you need to be paying more than the minimum monthly payment in order to make clear inroads into the actual debt.

This series is based on the content of the annual Stewardship seminar from King's

Budgeting...

Let’s consider budgeting. There are different ways to do this but this is how I do it. (I am amazed at just how many people don’t do it at all, so this approach will be basic!) I use a spread sheet on the computer and before such devices came along I used a calculator and a pencil and paper! Either works!


You need to write down all your income and expenditure – the first mistake that most people make is not to do that! By not tracking everything you won’t know where you are financially, so write down everything that you spend so you really do know what your income and your expenditure is each month. Note - not what you think you spend, but what you actually spend. Most people are good at this to a certain degree – but when you get down to the fine detail, that’s another matter. It’s the 20% that you don’t record that’s the problem and will continuously take you into the red – these are normally not your set costs, not the regular payments that go out each month but those day-to-day spending decisions. That Starbucks that you buy each day...

Most of my income is spoken for. I receive my salary from the church – it comes in to our bank account and then monthly commitments go out. Most people ‘back plan’, (that’s recording everything as you spend) few ‘forward plan’ and decide ‘I have this amount to spend on that area – and only that amount’! Christmas can then come as a bit of a shock - and rather than having planned for it, they decide to have a ‘good’ Christmas and then pay off the debts afterwards. Rather than thinking ahead earlier in the year and making provision for Christmas shopping by setting an amount aside each month throughout the whole year they plough on into debt. The same principles would apply to financing our eldest son going to university – I thought ahead and planned financially more than a year ago rather than crashing into the harsh reality! Financially I have a monthly plan, an annual plan and a 5 year plan. Then there’s my 25-year plan. I do this because I am aware that the decisions I make today impact what will happen in the future.

Reconciling your bank statement with your recorded expenditure is important – to regularly check what is actually in the account and see if spending is on track. And if the bank has made an error (it does happen!) – the earlier you raise the issue with them, the better!

Content taken from King's Stewardship Seminar...

Take responsibility!

When we look at personal finances there is a general principle from the Bible that if you are able, you are expected to work – I would suggest that is assumed in the story we read from Matthew 25. The responsibility is yours and no-one else’s and balancing the books at the end of the month or the end of the year is also your responsibility.


We have to recognise that it is possible to go through some life challenges that make managing money a really difficult thing to do – unemployment among other things – so I am not unaware of the real pressures that some of us face. In the current economic climate there are difficult decisions to be made for those who have been made redundant. Church leaders would want to be there to give pastoral support through that time and advise on priorities. But in the end it is each person’s responsibility before God as to the decisions made and actions followed, both with talents and money.

As in most churches, among King’s people there will be a whole range of very differing personal circumstances. Some may be in debt, some may be on benefits, some may be earning over £50,000. Some will be single, some might be students, some might have four children, and we recognise that there are differing ages and stages of life that make greater financial demands. I have three sons and in recent years my wife has been able to return to work but we have one son at university and investing in his future is costing me an arm and a leg! I am in that season. Furthermore, I am also in that season where my pension is becoming more important to me – much more than it was in my 20s. My advice is that you should prepare in your 20s for your future.

Content taken from King's Stewardship Seminar...