I’ve been troubled by taxes recently.  We all grumble about high taxes and not having enough left over to live on, so I won’t go there.  But, I’m still trying to understand how and what taxes are taken out.

I suppose I’m lucky that my employer takes out the taxes for me.  It’s the same in the US when you work for a company.  And it looks relatively simple – they take out PAYE and NI.  NI, or National Insurance, is kind of like Social Security and PAYE is all the other taxes.  I don’t recall if they ever asked about my marital status.  Unlike the US, they don’t have “exemptions”, where you claim for yourself and all your dependents, and your taxes vary according to this.  However, they do allow for a certain amount of your pay to be tax-free.

I still cannot get used to being paid monthly.  Of course, it’s been only two months.  And the way they worked out the monthly pay was extremely baffling until I called them and they ran through it with me. They did admit it was a bit strange, but they felt it was the fairest way.  So, even if I work more days one month, I may get less pay.  It made it difficult to understand the taxation as well.

I had worked out my taxes using calculators on the internet and the figures there differed from each other as well as my actual taxes.  I’m not sure whether to be pleased or worried because it’s more in one and less in the other, NI and PAYE that is.

The other part of taxes that has me worried is filing.  In the US, you’re supposed to file, because sometimes you owe money and sometimes you’re due a refund, for various reasons.  Over here, it seems that most people aren’t required to file because their taxes should already be taken out correctly.  It’s only if you receive income from more than one source, if you have business-related expenses that you want to claim, or if you are self-employed that you have to file.

To make it more confusing, the deadline for filing by paper was at the beginning of October.  If you didn’t file it then, you will have to do it online and the deadline for that is the end of January.  I don’t understand why there is a 4-month discrepancy on that.  And that being the case, when is the actual tax year?  In the US, the tax year is the calendar year – January to January.  You receive your W-2s (tax statements) after January and you can file from that point until April 15th.

Then there’s the question of Child Tax Credits.  I believe I qualify for this, but do I claim for it by filing taxes?  Is this similar to “exemptions” for dependents in the US?

I may sound ignorant about the tax system, but if the Chancellor needs tax advice, then I shouldn’t feel so bad.

It’s a good thing that I haven’t worked long enough or earned enough to pay double taxes this year.  My US income tax form will be relatively blank.  It may be a different story next year, but by then, I hope to have learned enough about the UK taxes so that I won’t be cheated of my income. 

How can you cut down on your costs of moving?  These are some lessons we’ve learned.

1.  Don’t move.  That’s simple enough and several times during the moving process, we did think about calling the whole thing off.

2.  Sell off everything and just take your clothes and whatever can fit in your suitcases. 

3.  DIY.  No, I don’t mean carry your entire shipment onto the plane (that would be terribly expensive) or ship.  You can only do this if you own your own plane or ship.  But, you can pack your own belongings.  This can be tricky, as you’ll read further.  But, it will definitely save you some money and a headache.  We had used a moving company once for an interstate move.  We did most of the packing, but they arrived early and ended up “helping” to pack.  What they did was open up some boxes and threw whatever they could find into it.  This is called “professional” packing services.  Therefore, for the international move, we used our “amateur” packing techniques, which included bubble wrapping and cushioning using our own clothes.  But, at least, we knew where everything was.  We labelled the outside of the box and made a list, numbering each box and giving a little more detail of its contents.  Using the company’s services meant you had to pay for the labour and supplies.  The cost varies from company to company.  The downside to DIY is that you are responsible for the contents.  The movers will still make their own list and the boxes need to state their contents.  Some movers require that you leave the boxes opened so they can inspect them.  Some companies, such as IntlMove, will not provide insurance cover for damages if you do any part of the packing yourself.  So, either allow them to damage your goods and you can claim for them later (if they’ll even acknowledge your complaint) or pack it yourself.  Some will allow you to deliver the goods to the docks, if you live nearby.  You do have to check with the companies.

4. Insurance?  As I stated, if you pack your own goods, some will only cover for total loss, not damage.  That means if they lose your shipment, you can claim against them.  We figured, unless the ship sinks, we should receive our goods, damaged or not, so we waived the insurance.  We found out later that everyone recommends you take the insurance.  I don’t see how that could have helped us.  I doubt they could adequately compensate for the loss.  After all, most of our goods had sentimental value, rather than monetary value.

5. Don’t go with the cheapest.  As we’ve learned, IntlMove gave one of the cheapest quotes, but in the end, we paid for a lot of “extras”.  We were lucky, however, since we actually received our shipment.  Others were not so fortunate.  I hope they took out insurance.

Although second nature to most Brits, to Americans the stages involved between buying a car and getting it on the road can seem quite convoluted. 

Once you have picked a car and decided to part with your money, there will be three additional items (and consequently expenses) you will need to consider:  road tax, MOT test and insurance.

The MOT test is a roadworthiness test used in the UK on vehicles over three years old.  It tests the safety, roadworthiness and exhaust emissions of vehicles, and is not a test of the vehicle’s mechanical condition (your car could breakdown on the way home from the MOT test center following a successful MOT test.)  The MOT test must be carried out at one of the UK’s registered MOT test centers and usually costs in the region of GBP 50 (for a standard car).  Cars over three years old must have annual MOT tests.  It is illegal to drive a non-exempt vehicle on public roads without a valid MOT test certificate.  Also, your car will need to pass an MOT test before you can purchase a road tax disc.  The test is more thorough than the state inspections used in some US states (at least, in our experience).

If you buy a secondhand vehicle, then there may be several months remaining on the MOT test certificate.  If this is the case, you will not need to have your vehicle tested until the anniversary date of the existing certificate.

Once your MOT test is taken care of you can proceed to get a tax disc.  The tax disc is akin to the US vehicle license and registration, but for most, other than very new economical cars, it is more expensive (usually upward of GBP 100, and can be as much as GBP 400).  You can get a tax disc at either the post office or a local DVLA center.  Any vehicle used or just parked on public roads is liable for the tax, and stiff penalties are in place for those who do not hold a current tax disc.

If the dealer from whom you buy your car has a “documentation fee” then you should ask him what this covers.  We have found that it usually means he will walk down to the local post office and transfer the tax disc to your name.  For this he may charge you about GBP 50.  It’s something you can do easily yourself.

Similar to the MOT certificate, if buying a secondhand vehicle, the existing tax disc may have several months left to run. 

The third and final requirement for getting a car on the road in the UK is valid motor insurance.  There are very many insurance brokers in the UK, so be sure to shop around.  If possible, avoid brokers altogether and talk directly to an insurer.  There are several insurers that deal directly with the public.  Direct Line is one, there are others.  We very strongly suggest you talk to these before making a decision on your motor insurance;  it could save you many hundreds of pounds per year. 

Be very wary of the current fad of insurance comparison sites.  In our experience, these do not always list many inexpensive insurers and are mostly a vehicle for brokers to ply extra trade.

If you plan on driving on your US or overseas license then you should expect a hefty annual insurance premium (likely to be upward of GBP 1100 per year!)  from high street broker sold policies.  You might have  no choice but pay exaggerated premiums for 12 months until you establish a driving record in the UK.  However, if you have a clean insurance record in the US then read on!

UK motor insurance has a “reward” system based on the concept of “no-claims”.  For each full year you drive without an insurance claim against a UK insurer you earn points that give discounts on premiums for subsequent years.  This is no good if you have spent the last 5 or 10 years driving in the US!  So, why am I telling you this?  Well, if you talk directly to an insurer (such as DirectLine) they might be willing to honour your clean insurance record from overseas.  If you have, say, 5 years claims free with State Farm in the US then the insurer will consider a letter from State Farm when assessing your insurance.  You need to be able to prove a claims free record with your US insurer.

Car rentals can be very expensive in England.  It is even more so if you cannot drive a manual.  Most cars here are manuals.  They are cheaper to rent, as well as buy, because they are more readily available.  Some car rental companies do not carry many automatics, if at all.  So, if you can’t drive a manual, you should start learning now.

For those, like me, who cannot drive manuals and dread learning to, there are other considerations in renting that will impact their finances.  First, and foremost, is the insurance.  If you cannot prove that you have adequate insurance coverage (for their purposes), then you are required to purchase their insurance.  In addition, if something should happen, there is a high deductible (called excess) applied.  This deductible is added to your car rental until you return it claim-free.  You can also choose to pay an extra fee to reduce this deductible (or excess).  The terms were so confusing that we did not fully understand it at first.  Besides the basic car insurance that you pay for, you also must pay another insurance for Tire & Windshield.

The issue regarding fuel over here is similar to the US.  You either choose to pay for your gas upfront or refill it to the same level you took it out.  If you don’t return it at the same level, they charge you a small fee for refueling it.  The difference is that you don’t have to pay the maximum rate for fuel.  They just charge you their current fuel charge, which can be cheaper than what you’d find locally.  I know Hertz does something similar now.

When we’ve rented in the US, there never seems to be a major inspection of the car prior to you taking the car; but when it is returned, sometimes they look it over, other times you just park it up and leave.  that attitude varies over here.  Some places, you have someone going around the car quite thoroughly with you before they hand over the keys and they do the same when you return it.  Others, they just hand you the keys and expect you to look it over yourself.  It is your responsibility to report any damage to the car before you take it.  Otherwise, you may be expected to pay for it.

Whether you are visiting or staying, you will need your passport as proof of identity.  Some places (we know from our experience of Enterprise) will also require your flight details in order to confirm that you are only renting temporarily.  If you are staying, some places (again, Enterprise) will want proof that you are residing here – they will want two bills for this.  It made it difficult for us because we still didn’t have a place of residence and needed a car to rent.  We couldn’t prove that we were staying because we didn’t have any bills and we couldn’t prove that we were visiting because we didn’t have airline tickets.  They had no answer when we asked how we could rent a car so that we could get around and find a place to live.  Luckily, we had found another company that was not going to put us through that rigmarole.

It’s best to use a credit card to reserve a car.  Using a debit will mean that they will take your money out first and return it later if you did not damage the car.  I find it more reassuring if they only take out money after the fact and you know how much they will take, rather than guessing whether they have returned your money.  Or, if you have cash on hand, that is even better.  Just remember that Discover is not accepted at most places in England.