Archive for the ‘Money’ Category

Batch conversion of historical foreign currency values into a native currency

Friday, June 8th, 2012

Maybe you are in the situation where you have received payments in a variety of currencies, and now you need to convert the payment values into another currency (perhaps your own native currency).

But your task is made more complicated by the fact that you need to use the exchange rate at the date the payment was received, rather than totalling up all the values in each currency and then using a single exchange rate from a specific date.

This could happen to you if for example you receive PayPal payments in a multiple currencies and want to produce a report showing how much you earnt each month. For the monthly totals to make sense you would have to have all the values in a single currency.

You could do all the conversions manually, but that would be very tedious if there are more than a few to convert. Using an Excel spreadsheet to do it for you is much more fun.

Download payment and currency data

First of all I downloaded my transaction history from PayPal. Here I’ve set it to download a year’s worth of data.

currency conversion by date 1

Then I downloaded some historical exchange rate data for the same period. I got my data from Oanda (http://www.oanda.com/currency/historical-rates/), but there are plenty of other sites offering similar data.

currency conversion by date 2

I set the ‘Currency I Want’ to be my native currency (GBP) and then used the ‘Currency I Have’ to get the currency data for each of the currencies I’ve received payments in. Which in my case is USD and EUR.

Using the spreadsheet

The spreadsheet contains some example payment data, and historical currency prices for USD and EUR so you can see how it works.

The areas that you’ll need to edit have yellow column header, and the areas with orange column headers are auto-calculated for you and shouldn’t be edited.

Download the example historical batch currency conversion spreadsheet – XLS (20kb Zip file)

Enter the payments

On the ‘Payments’ tab I entered the details of the payments received from Paypal (I filtered out any payments that I made). The data should nicely fit into the existing columns if you downloaded it as ‘Comma Deliminated – All Activity’. If your data is not from Paypal, or is in a different format you may have to re-order your columns to fit my spreadsheet.

currency conversion by date 4

The important bits to enter are the dates in column A, currency in column G, and amount in Column H.

currency conversion by date 5

You should then enter your native currency tag into cell P3. E.g. my native currency is GBP which means that I don’t want any payments received in GBP to be converted. Payments in the native currency can just be used as-is.

currency conversion by date 6

Columns L-N contain calculated values. You shouldn’t need to edit them, but you may need to copy down the formulas if you have a large list of transactions.

Enter the historical currency data

Next you should enter the historical currency data into the ‘FXRates’ tab.

currency conversion by date 3

Enter it from row 6 onwards, using a separate column for each currency. Make sure the dates for each currency match up.

Above the data in row 3 you should enter a currency tag for each currency. This tag should match the currency tag that is in column G of the ‘Payments’ sheet. E.g. you may have USD, HKD, EUR etc.

Cell A3 contains the native currency tag that you entered on the ‘Payments’ sheet, you don’t need to edit this cell.

Also don’t modify the numbers that are highlighted in orange on row 4. These are column numbers which are used to help the formulas pick the correct currency.

I use a HLOOKUP to get the column number of the currency:

=HLOOKUP(G4,FXRates!$A$3:$Z$4,2,FALSE)

And then I do a VLOOKUP to get the exchange rate. You’ll see the first condition sets the exchange rate to ‘1’ if the payment is in the native currency.

=IF(G4=$P$3,1,VLOOKUP(A4,FXRates!$A$6:$Z$10000,L4,FALSE))

Simple?

If you’d done it all correctly you should see the converted values in column N of the ‘Payments’ sheet. You can see a total in Q3.

I’d recommend you cross check a few random values to make sure that you have set the spreadsheet up correctly.

2012 – 2013 UK tax graphs for income tax and NI

Wednesday, April 18th, 2012

I’ve been publishing UK tax graphs since the 2008-2009 tax year. It is easy to find tax information in the official government tables, but it is very hard to find simple graphs that show that the numbers mean in simple terms which is why I make these graphs. I missed out last years graphs so this year I will include the 2011-2012 and the 2012-2013 tax years. The 2010-2011 tax year is also included for comparison.

First of all here is an overview of the overall percentage of tax paid for salaries up to £200,000. The percentage for the 2011-2012 and 2012-2013 years jump mainly because of the national insurance rate increasing from 1% to 2% for earnings above the upper earnings limit.

percent tax vs gross salary 2012 2013 2

At the more average end of the salary scale the change between the years is more affected by the increase in the personal allowance.

percent tax vs gross salary 2012 2013 1

Here is a closer look at the income tax. It shows that the changes between these years have been fairly minor. There is always a lot of talk about tax changes in the budget, but in reality things don’t change much.

income tax 2012 2013 2

income tax 2012 2013 1

The national insurance graphs show a larger change for higher earners since the 2011-2012 tax year because of the 1% rate increase.

national insurance graph 2012 2013 2

national insurance graph 2012 2013 1

And finally two charts showing the absolute change in pounds paid as tax during these two tax years. These show that taxes for average earners have been decreasing, and taxes for higher earners have been increasing.

uk tax change 1011 1112

uk tax change 1112 1213

More next year…

Salary vs Dividend graphs for a one man limited company

Tuesday, April 17th, 2012

Just for fun (and because I couldn’t find these anywhere) I’ve made some graphs showing the effects of different salary and dividend combinations on the amount of money you can move from your limited company into your personal account.

There are some assumptions I’ve had to make.

  • This is for the 2012-2013 tax year.
  • These figures are for a VAT registered company (standard VAT scheme, not flat rate), so turnover is net of VAT.
  • No expenses or pension contributions are accounted for.
  • You withdraw all retained profit (after paying salary and corporation tax) as dividends.
  • Corporation tax is deducted at the small companies rate of 20%.
  • You are under 65 and have the default personal allowance of £8105.

I’ll point out that I’m not an accountant so I don’t guarantee any kind of accuracy, but I’ve cross checked some of the figures against a few of those tax calculators that many accountancy companies have on their website and they seem to fit.

Salary vs money extracted from company

This graph shows how much money you could get out of your company depending on turnover and what salary you set yourself. By ‘take home money’ I mean the salary plus dividend remaining after all taxes have been paid. In other words the money that is left for you to spend.

contractor take home pay vs turnover

The lines stop at the point where the maximum amount of money has been extracted from the company.

Here is a simplified version just showing a turnover of £60,000. Note that the y-axis starts at £30,000.

contractor take home pay vs salary

You can see that your extracted money goes up at first as your salary increases because you are making use of your personal allowance. Then it hits a very obvious peak after which income tax and national insurance kick in.

The maximum amount of money extracted is reached by paying salary at the national insurance secondary threshold level which is £144/week or £624 per month giving an annual salary of £7488.

In the above graph you can see that someone can take nearly £47,000 net out of the company. By doing this they dodge all national insurance payments, but as they are paying a salary above the lower earning limit they still get a full national insurance contribution record for the year. Their contribution is therefore subsidised by other workers who are paying national insurance. Is this a fair system? Probably not; a standard full time employee would have to earn about £69,000 gross and pay over £4500 in employee national insurance contributions to get this level of net income. However as long as this form of tax avoidance is legal you can’t really blame people for doing this.

Perhaps linking national insurance contributions to income with an upper cap would be a more effective way for HMRC to collect their NI money from everyone who can afford it.

Dividend vs salary with all taxes

This chart shows all the PAYE, corporation and dividend taxes. You might spot that the ‘Take home money’ and the ‘Total Tax’ are perfect mirror images of each other, and the two together add up to the turnover.

contractor tax salary dividend

The dividend is the declared dividend paid to you which doesn’t include the 10% tax credit. At the start of the graph the dividend is above the ‘take home money’ because part of the dividend is then taxed at the higher rate.

And because the taxes are squashed at the bottom here is a more zoomed in version.

contractor tax breakdown

The total tax is including the employee PAYE, the employer NI, and any extra tax due on dividends. You can see that if you increased your salary from the secondary threshold level of £7488 to £15,000 you and your company would be paying an extra £1500+ of tax.

The final graph shows the income tax and national insurance.

contractor paye taxes

I hope this is all correct – if you spot any mistakes do let me know and I’ll fix them.

Thomas Exchange UK Maddox Street

Monday, March 19th, 2012

I’ve previously reviewed Thomas Exchange Global on The Strand, and Thomas Exchange Global on Victoria Street which are both part of the same company. This time I’m reviewing Thomas Exchange UK on Maddox Street, which despite the very similar name is (as far as I can tell) a completely separate company. As before I needed to buy Yen for one of my trips to Japan.

It is located on a fairly quiet street in central London so you probably aren’t going to come across it unless you make a special trip. Like the other two places I’ve reviewed it is usually listed as one of the best places on the Martin Lewis Travel Money Max website.

thomas exchange uk maddox street

On arrival I told the man at the counter how many Yen I wanted to buy and gave him my cash. Unlike in the other two places where my money was counted in front of me, he went into a back room to do the counting.

This meant that I was left without my Pounds, Yen or any proof that I’d given him my money whilst he was dealing with it. It took him 2-3 minutes to come back. When he did he gave me the correct amount of Yen which I double checked before leaving.

The two Thomas Exchange Global’s I’ve visited were both in very busy locations with a lot of customers. This foreign exchange shop was quieter both in terms of location, and in the shop itself.

Apart from the slight worry caused by my money being taken out of my sight everything went smoothly and I’d be happy to use this branch again.

Thomas Exchange UK is at 13 Maddox Street, London, W1S 2QG.


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Extending a leasehold, Section 42 and the LVT

Tuesday, October 4th, 2011

I recently completed a leasehold extension which involved issuing a Section 42 notice and applying to the Leasehold Valuation Tribunal. It was a long process but now that it is over I can share an account of what happened.

leasehold extension

If you have bought a property in the UK there is a high chance that you have bought a leasehold. A leasehold is like a very long term rental. Instead of renting for 6 months you are renting for 10s or hundreds of years. The ultimate owner of the land or property is the freeholder. If you own the freehold, or a share of the freehold you will never have to worry about extending the lease (because you own the land/property, and are not leasing it).

In this post I’m going to give real figures for the surveyor and solicitor costs for both sides, but I don’t want to reveal the actual property value or premium amount. I will however give re-scaled figures. I am going to use the diamond symbol ⋄ as my unit, and have re-scaled all the premium costs based on the property being worth 100,000 of this units at the time the process was started– so ⋄100,000.

You can quickly turn the premium estimates and valuations into percentages of the property price by dividing by 1000.

The rough lease extension process

In order to extend a lease you will have to pay your own surveyor and solicitor costs, as well as your freeholder’s costs.

If the lease is less than 80 years in length you will have to pay the freeholder 50% of the marriage value. The marriage value is the increase in property value as a result of extending the lease.

You can come to an agreement without invoking the Section 42 process if both sides are happy with this. But in many cases both sides don’t agree, so the statuary Section 42 process will need to be invoked.

Issuing a Section 42 notice to the freeholder will force him to give you valuation, and it mandates that the process and outcome follow a standardised set of rules. These include fixing the time scales by when each side has to respond, the terms of the new lease, and the right for the leaseholder to take the case to the Leaseholder Valuation Tribunal if no agreement can be reached.

If the LVT stage is necessary then each side will be responsible for their own costs for this stage.

Initial enquiries – July 2009

I’d owned my property for about 8 years and had been aware of the lease length slowly ticking down. It had got down to about 67 years before I first did something about it.

I sent an initial letter to the freeholder asking him for a rough figure as to what it might cost. He replied a week later saying that I would have to pay for his surveyor costs (£850+VAT) to get a proper valuation, but he guessed it might be around ⋄8600. This would not be for a 90 year statutary lease extension, this would be for a negotiated extension whereby the existing lease would be surrendered and a new 125 year would be granted.

There are several problems with going down the negotiated route.

  1. The freeholder can give you any valuation he likes. Even though he guessed ⋄8600 in his letter he could well come back with a figure of ⋄15000 later on. By which time the £850+VAT valuation fee has been paid. And this valuation is not necessarily valid for the S42 process – you may have to pay the freeholder’s valuation costs again if you then decided to abandon the negotiated route and go down the S42 route.
  2. The negotiated lease could contain clauses that are unreasonable.
  3. It is likely you would have to agree to a rise in the ground rent.

Forming a group – February 2010

I did nothing more until the next year when one of the other residents in my building sent round a letter asking if anyone was interested in joining him in extending their leases in a group to save on surveyor / solicitor costs.

This seemed like a good idea so I sent him my name. He had already contacted a surveyor and solicitor that he recommended we use. There were 4 people with 5 flats originally in the group, but one dropped out later. The core group was 3 people, with 4 flats between us.

Surveyor valuation – May 2010

The first step would be the surveyor’s valuation which would cost £587.50 each. I had to give him a £100 deposit to commit. By the end of March we had all committed and his visit was scheduled for May.

When he visited he looked at the existing lease and made some notes about it. Then he looked around the flat and took some measurements. After he’d been to all our flats we all had a drink together and he told us about the process and answered our questions.

Two weeks later we received his valuation. He estimated the cost of a statutary lease extension at ⋄7500. He recommended we put in an offer at ⋄5800. And he predicted that the freeholder might try to seek a figure of around ⋄9300.

Issuing the Section 42 notice – July 2010

Around the time the surveyor’s valuation was carried out I arranged for the solicitor to make an ordinary power of attorney (PoA) so a relative could act on my behalf whilst I was away in Japan.

In June the solicitor was given the go-ahead to issue the Section 42, and in July the notice was served – it was signed by a relative using the PoA.

Once the Section 42 is served the freeholder has two months to respond. And once the Section 42 has been served the freeholder can insist on 10% of your offer price being put on deposit with your own solicitor. As my offer was for ⋄5800 this meant I had to send a ⋄580 deposit.

A month later in August the freeholder responded disputing the validity of the Section 42 notice as it had not been signed by me personally. I had to send over a new signed Section 42 notice from Japan which had to be re-served on the freeholder. This unfortunately resets the two month period.

Valuation received from freeholder – October 2010

In October 2010 the counter notice was received from the freeholder. His valuation was ⋄11100, much higher that even the surveyor’s expectation of what the freeholder might ask for.

Negotiation

Now that the counter notice had been received there were three options.

  • Give up!
  • Come to a agreed price by negotiation.
  • Take the matter to the leasehold valuation tribunal. They can made the decision on the fair price for you.

An application to the leasehold valuation tribunal (LVT) has to be made within 6 month of receiving the counter notice from the freeholder.

That meant there was about 5 month of negotiating time left before we felt we needed to get the LVT application ready (best not to leave it to the very last minute!).

Over a month later my surveyor managed to get a copy of the freeholder’s surveyor’s calculations. But the freeholder’s surveyor remained fairly elusive and non-responsive for the next 4 months. Although both surveyors occasionally communicated little common ground was found. Much of the disagreement seemed to centre on what percentage to use for the ‘relativity’ in their calculation.

No offers or counter offers were made during this time. Occasionally I would email the surveyor for news, and after waiting 2-4 days he’d reply saying there wasn’t much to report.

The surveyor estimated that if this went to tribunal his costs would be around £1500. And we would have to pay for our solicitor to attend the tribunal as well – the solicitor never gave an estimate of his costs for attending the LVT.

Application to the LVT – March 2011

It reached March 2011 and the 6 month deadline was looming so we asked the solicitor to make the LVT application. 10 days later the LVT acknowledged that the application was in their system.

In April the LVT issued some written directions stating when the freeholder must send the draft lease for us to look at, and a suggestion that the hearing take place between June and August 2011.

Lease terms agreed – May 2011

In May the solicitor contacted us to say that the terms of the draft lease had been agreed. This is referring to the wording of the lease, not the premium. That was still very much unresolved!

An offer from the freeholder – May 2011

At the end of May, to our surprise, we received an offer from the freeholder. He would agree to settle for ⋄9300. This was much lower than his original offer of ⋄11100, but still a lot higher than my surveyor’s estimate of the fair value being ⋄7500.

Agreement – June 2011

In June the final premium of ⋄9300 was agreed. The agreement was signed by a relative using the PoA which had earlier on invalidated the initial S42. The money was transferred in July, and the final lease, and Land Registry documents were received at the end of August.

Leasehold extension timeline

Here is the timeline of events.

leasehold extension timeline

Here is the same timeline shown as a list.

  • 01/03/2010 Surveyor contacted
  • 31/03/2010 Surveyor given go ahead for valuation
  • 27/04/2010 Solicitor asked to prepare Power of Attorney
  • 04/05/2010 PoA ready
  • 11/05/2010 Surveyor valuation visit
  • 24/05/2010 Surveyor valuation received
  • 24/06/2010 Gave go ahead for solicitor to issue S42
  • 20/07/2010 S42 served on freeholder
  • 02/08/2010 10% deposit transferred
  • 18/08/2010 Freeholder disputes validity of S42
  • 23/08/2010 New S42 served on freeholder
  • 13/10/2010 Freeholder’s valuation received
  • 19/11/2010 Surveyor receives freeholder’s calculations
  • 07/03/2011 Asked solicitor to make LVT application
  • 17/03/2011 LVT acknowledges application
  • 15/04/2011 LVT issues written directions
  • 17/05/2011 Terms of draft lease agreed
  • 27/05/2011 Surveyor mentions possible offer to settle
  • 15/06/2011 Premium is agreed
  • 07/07/2011 Lease extension completion
  • 19/08/2011 New lease and Land Registry docs received

Lease extension cost breakdown

These prices include VAT. I haven’t included the £111.63 power of attorney, as this isn’t required in normal circumstances. I only had one arranged as I was going to be out of the country for a long time.

My surveyor

£587.50 – Valuation (based on 5 flats)
£600.00 – Negotiation (based on 4 flats)

My solicitor

£44.00 – Land Registry search for issuing Section 42
£60.00 – Issue the Section 42 notice (based on 4 flats)
£50.00 – Fee to ‘protect our position at the Land Registry’ for S42
£300.00 – Submit LVT application (based on 4 flats)
£300.00 – Dealing with new lease after issued by freeholder (based on 4 flats)
£50.00 – Land Registry fee for registering the title
£4.00 – Miscelaneous Land Registry search fee

Freeholder’s costs that I had to pay

£1057.50 – Surveyor
£1085.00 – Solicitor
£1.55 – Special delivery fee

Estimates vs valuation vs final price

This graph shows how the estimate, valuation and final price varied.

leasehold extension estimate vs final premium

Conclusions

The whole process took about a year and a half to complete and used £4139.55 in costs (surveyor/solicitor). The premium was another ⋄9300 on top of this (or 9.3% of the current estimated value of the property).

A lease extension is certainly an expensive and time consuming process.

It isn’t too complicated if you leave everything up to your surveyor / solicitor, but it may be best avoiding it in the first place by not buying a property with a short lease.

Thomas Exchange Global Victoria Street

Monday, April 18th, 2011

I needed another load of Yen so I decided to go to the bestforeignexchange.com currency shop which is located on Victoria Street. I found it listed as one of the best foreign exchange places on the Martin Lewis travelmoneymax.com website.

thomas exchange global victoria street

Looking more closely at the bestforeignexchange.com website it turns out that this is another Thomas Exchange Global like the one I visited and reviewed on The Strand the last time I needed Yen. I’m guessing they are using different names and websites for each branch to get more coverage on the search engines and travel money comparison sites. That doesn’t matter to me though – I just want a good rate.

To get the best rates they recommend you order your money in advance with their fast track service. I did this on the same day via their website. You just enter how much of each currency you want and then submit the order. You can specify that you will pay in cash so that you don’t have to pay any money until you get to the branch.

best foreign exchange fast track order

The branch is at 141 Victoria Street, a short walk from Victoria station. As Victoria Street is a busy area I’d recommend you bring your cash in a hidden money belt. The main branding on the outside lists the shop is Thomas Exchange Global.

When I arrived I told the man behind the counter that I wanted to collect an order – and gave my name which was the order reference. As my order was worth less than £2000 they didn’t ask for any ID. He retrieved the Yen very quickly and then put my pile of £20 notes through a bank note counting machine. He then counted out my Yen by hand twice, and gave it to me with my receipt, and a small amount of British change.

In my case I didn’t request any particular bank note denominations so I can’t say what they are like for special requests – but there is a box on the order form for messages, so if you do have requests you could try putting them in the form.

From arriving at the Victoria Thomas Exchange Global branch to receiving my Yen must have taken less than three minutes. They are very quick and seem to keep any verbal communication to the bare minimum.

Both this and the Strand Branch of Thomas Exchange Global are very similar. They are very fast, and consistently appear near the top of the travelmoneymax.com list for Yen, so I’d happily use either of them again for cash orders.

I’ll have another currency exchange review coming up soon. I split my Yen order into two batches so that 1) I wouldn’t be carrying/exchanging too much money at once and 2) so that I could try out two different travel money branches.

Estimate the value of your house or flat with a graph

Thursday, November 4th, 2010

If you want to know what the current value of your house, flat or property is (useful if you are buying, selling, or extending the leasehold for example) you can go for the easy option of asking an estate agent to do a valuation, or use a tool such as Nationwide’s house price calculator. Both have their disadvantages; the estate agent will almost certainly try to sell you an overly inflated figure to get your business, and an online tool such as the one from nationwide bases the prices on a very wide region (e.g. Greater London).

If you live in an area with lots of similar properties (e.g. a block of flats, or a street with very similar houses) and are good at Excel you can produce a localised graph of property prices over time. The scatter graph below is of the prices of flats for one specific street in London. The red line is the Nationwide regional data for flats in Greater London. Based on the sale prices of other similar properties you can make a guess as to the value of yours.

house price estimation graph 10

I’m going to assume you have a reasonable amount of Excel knowledge – this is *not* a step by step guide. To follow this you need to know how to import data into Excel, produce graphs, add new data to existing graphs, and format/sort data.

To start with you’ll need historical property sale prices. There are lots of websites that you can get them from, but www.houseprices.co.uk gives you them in a form that is easy to import into Excel.

house price estimation graph 1

Try searching by postcode and by street name to get the relevant prices for your block of flats or street. I’d suggest setting the number of results to 100 so the data isn’t too broken up by their adverts.

Copy and paste the prices tables (there will be multiple tables split by ads) into your Excel sale prices spreadsheet one after the other.

house price estimation graph 2

This produces a basic date vs price graph. If you select from the first date / house price to the last then Excel seems to correctly guess which way round the X and Y axis should be. If you include the column names in the selection Excel gets it wrong.

house price estimation graph 4

If you want to compare against regional data like I did, go to Nationwide’s house price data download page. I chose the ‘Regional Series’ / ‘Flats (Post 91)’ as the best match for the actual property price data I had.

house price estimation graph 5

The Nationwide spreadsheet data looks like this with prices by quarter and region.

house price estimation graph 6

Unfortunately Excel doesn’t understand the date formats in this spreadsheet (e.g. Q2 2009) so I used Find and Replace to change the Q1/Q2/Q3/Q4 values into dates. E.g. I changed ‘Q1 ‘ into ‘01/01’. Note that I used the find and replace to remove the extra space.

house price estimation graph 7

Then I marked the column data format as being in ‘date’ format.

house price estimation graph 8

I then copied the Nationwide data into a separate area of my original property sale prices spreadsheet. The data from the Nationwide spreadsheet is in chronological order, whereas the data from houseprices.co.uk is in reverse chronological order. I therefore sorted the Nationwide data to be in reverse chronological order as well so that it could be easily added to the same graph.

Finally I added a new data series to my original graph by selecting the Nationwide dates for the X axis and the prices for the Y axis.

house price estimation graph 9

And this is of course the result (I did a bit of tidying / formatting of the graph to make it look better), which will look familiar as being the graph at the start of this post.

house price estimation graph 10

It can’t predict the future, but you can make some useful assumptions based on past property prices. And it can give you a good indication if your estate agent is over inflating his/her estimate.

Graphing the Post Office Over 50’s Life Cover plan

Saturday, October 16th, 2010

Two years ago I produced some graphs showing how much you might pay vs how much you’d get back with two over 50 plans from AXA Sun Life. Today (Saturday 16th October 2010) The Times has included one of these graphs in its paper, so I thought I’d produce another set of graphs for a different company. This time it is The Post Office.

As before I’ll mention that I’m not a financial advisor, I have no personal connection to these kinds of plans, and I’m not making any kind of recommendation. All I am doing is turning the numbers for the Post Office Over 50’s Life Cover plan into some graphs. I’ve done my best to make these graphs accurate, but if you spot any problems leave me a comment.

I got a quote for a 65 year male using their website based on paying in £7 per month. Using these figures will get you a fixed £892 lump sum (or rather your family will), payable on death. You get this lump sum if you die after the first 12 months. If you die in the first year you get your premiums back. Your payments stop after 20 years when you are 85, and there is no cash in value. So if you stop making payments you get nothing back.

There are some other terms which affect the plan: if you die in an accident within the first 12 months you get your full premium back, and if you die of an accident after the first 12 months you get double your premiums back. I am not taking these additional terms into account for my graphs, but of course you might take them into account if considering a policy like this.

That is a rough summary in words – but what does it look like when turned into a graph?

post office over 50s life cover 1

The pink line is the lump sum payable which remains fixed, and the blue line is what you pay in. This remains fixed until you have paid in for 20 years. This person starts paying more in than they’d get out of the plan once they reach 76 years old.

It can be useful to compare the figures against what you’d get if you put the money into a bank account. This graph has two additional lines. One for saving this amount monthly at 2%, and the other at 4%.

post office over 50s life cover 2

These plans are all to do with when you die. Obviously the companies selling these plans have to make a profit (you don’t think anyone would give you free money do you?), so they use the average life expectance to work out how much life cover to give you.

Some people will get more than they paid in, but as with all other kinds of insurance the company has to make more money back. If the companies who make these policies paid out more than you gave them (on average) then they’d go out of business.

The National Statistics Office produce tables of life expectancy information. By looking at the ‘Great Britain, Interim Life Tables, 1980-82 to 2007-09’ I can see that a 65 year old male has a life expectancy of another 17.61 years. This means a man who is now 65 years old will die when he is 82.61 years old (on average of course).

Here are the above two graphs again, but this time with a smaller scale. Instead of being from 65 to 100 years, they are from 65 to 85 years.

post office over 50s life cover 3

post office over 50s life cover 4

Again as I mentioned above these kind of plans do offer other benefits such as accident insurance, so you have to make up your mind using all the available information.

But I hope you can see that a little bit of work in Excel can make the numbers a lot easier to understand.

The Post Office Over 50 Life Cover page is here, and on this site you can find similar but old graphing information for the AXA Sun Life Guaranteed Over 50 plan.

2010-2011 UK Tax graphs

Tuesday, June 15th, 2010

Straight after putting up the tax graphs for 2009-2010, I’m putting up the tax graphs for this tax year. This time the graphs are better, and some of them include a comparison line with the previous year’s figures.

As before I’ll state I’m not an accountant or tax expert so I can’t guarantee their accuracy, but I’ve done my best. The graphs assume that you are getting the default allowances. Let’s start with an overview of how much tax you’ll pay.

2010 2011 total tax graph

The big change for this year is the new higher 50% rate of tax, and the tapering off of your personal allowance once you reach the income limit. For most people this has no impact, it is only once you start getting over £100,000 that your tax will rise. You can clearly see the change in tax by comparing the red and blue lines in the graph.

Next is a more visual way of seeing the tax changes. The first slope is where the personal allowance tapers off, and the next one is where the 50% tax band kicks in.

2010 2011 tax changes

Income tax and national insurance

The overall tax you’ll pay is composed of income tax and national insurance. Here are two graphs showing how much of each one you’ll be paying.

2010 2011 income tax graph

2010 2011 national insurance graph

Gross salary vs net salary

Here is a graph showing your gross salary vs your net salary.

2010 2011 gross salary vs net salary graph

And a more zoomed in version which only goes up to £60,000.

2010 2011 gross salary vs net salary graph zoomed

Percentage of tax

And finally I have a graph showing the percentage of tax you pay against your gross salary. You can see that the new tax changes have made the shape more uneven (i.e. more complicated) than in the previous tax year. This is sure to be good news for accountants!

2010 2011 tax vs gross salary

2009 – 2010 UK tax graphs

Thursday, June 10th, 2010

Here are some graphs showing income tax, national insurance, total tax and percentage of tax for the 2009-2010 tax year. I have also included a graph showing how total taxation has changed from the 2008-2009 tax year. If you want tax graphs for the current tax year go to my 2010-2011 tax graphs page.

I’ve done my best to make these accurate; however I’m not a tax expert so I can’t guarantee these are correct. These are therefore just for interest, and not for serious use.

2009-2010 income tax

First up income tax – everyone’s favourite tax!

2009 2010 uk income tax graph

After a short tax free allowance you can see how the basic rate of tax hits, and then the higher rate of tax causes the angle to increase.

2009-2010 national insurance

National insurance follows a different shape as once you reach the higher band the rate drops to 1% rather than increasing.

2009 2010 uk national insurance graph

2009-2010 total tax

This graph combines both the income tax, and national insurance to show the total amount of these taxes that you would be paying.

2009 2010 total tax graph

And here is a version that is more zoomed in – it only goes up to £60,000.

2009 2010 total tax graph zoomed

2009-2010 percentage of tax

Perhaps more interesting than the amount of tax you pay, is the percentage of tax you pay. This graph shows the combined income, and national insurances taxes against gross salary. The dip somewhere after the £40,000 level is due to the national insurance dropping to the 1% rate before the higher rate of income tax kicks in.

2009 2010 uk percentage of gross salary as tax graph

Change in tax from 2008/09 to 2009/10

This final graph shows how the amount of tax you pay has changed from the previous tax year, to the 2009/10 tax year. You can see that the amount of tax to be paid has actually decreased. This is due to the increase in personal allowance for 2009-2010.

0809 0910 tax change graph