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► The Money Handbook
The Money Handbook - International Students 2006/07
Introduction
This guide has been written specifically for you as an international student, whether you are self-financed or sponsored, to help you manage your finances in Britain.
We recommend that you have at least £9000 for the year 2006/07 to cover your basic living expenses. Those of you with dependants will need approximately £5000 extra per adult dependant and £3000 per child (per year, excluding childcare costs). This is in addition to the money needed to pay your tuition fees.
Contents
Section 1: Budgeting
Section 2: Maximising your income
Section 3: Getting the best deals
Section 4: Dealing with financial difficulties
Although budgeting will not increase your income, or help you pass your exams, it may reduce a financial headache when you need it least.
How do I budget?
You are responsible for your own money and a budget should be based on your own individual needs, priorities and guaranteed income.
When working out a budget, be realistic and as accurate as possible. A budget can be planned over a weekly or monthly period, whatever suits you best, and can be changed as and when your situation changes.
When planning your own budget, you may find the following steps useful.
Step 1. Work out your income
Use a budget planner to list all your guaranteed income. Do not include earnings from part-time or vacation work unless you can depend on these.
Step 2. Work out your essential outgoings
Firstly you should list outgoings that occur on a regular basis, starting with priorities. Your priorities should generally include rent, hall fees or mortgage payments, fuel, water rates, council tax (if applicable) and food. It may not be easy to estimate some outgoings, such as gas and electricity costs, so consider asking the fuel companies to set up a regular monthly payment based on what they estimate the usage will be.
It is vital that you put money aside for these priority outgoings as non-payment may cause serious problems.
After you have calculated what your priority outgoings will be, you will have an amount left for other expenditure such as travel costs, clothes and study related costs. Try to account for emergencies and one-off costs such as birthday presents.
When you have deducted all your costs from your guaranteed income you may have a surplus to spend on non-essential items. However it is more likely that you could have a shortfall and that you will need to reduce your spending or increase your income.
There are a number of ways you may choose to maximise your income for example by taking some part-time work or by claiming certain welfare benefits to which you may be entitled.
EMPLOYMENT
Most students now take some form of part-time work to top up their income.
All students from the European Economic Area are allowed to work without any restrictions.
If you are an international student from outside the European Economic Area please read the Working in the UK During Your Studies section.
Finding work
ULU offers part time work to students in areas….
Employment Conditions
Most workers aged 22 are entitled to a minimum wage of £5.05 per hour (increasing to £5.35 from October 2006). For workers aged 18-21 the minimum wage is just £4.25 per hour (£4.45 from October 2006).
Most workers who earn over £89 per week are also entitled to statutory sick pay.
These are minimum working conditions enforced by employment law. Some employers will provide more generous conditions.
INCOME TAX
All individuals regardless of their age or nationality are liable to pay Income Tax if their income exceeds their personal allowance which is currently £5035 for the year 6 April 2006 to 5 April 2007.
If you only work during the three holiday periods (Christmas, Easter and Summer) and you estimate that your total income for the tax year will be less than the personal allowance, ask your employer for a form P38(S) or pick up one from the Student Advice Centre. Return the completed form to your employer to enable your wages to be paid without deduction of Income Tax.
Completion of this form is not applicable if you are working during term time (e.g. evenings or weekends).
If you work for an employer, he or she will usually take the tax from your earnings each payday and pass it on to the Inland Revenue. This is known as the Pay As You Earn (PAYE) system. This collects tax automatically and saves you having to pay tax in one go at the end of the year. Your employer knows how much tax to deduct each payday because the Tax Office will have issued you and your employer with a PAYE code. The PAYE code tells your employer to start to deduct tax from your earnings over an amount set by the code. When you start work for the first time, or start a new job when you have previously worked but do not have a P45, your employer will use a temporary code until the Tax Office issue your proper one.
Claiming back tax
If you have paid tax you can submit a request for a rebate at the end of the tax year in April to reclaim any tax paid.
Alternatively, you can claim tax back when your employment ends if you have worked for a limited period, you paid tax on those earnings and you are not going to be working again in the tax year. Complete form P50 and return it to your previous employer’s Tax Office. The Inland Revenue will then calculate any tax rebate.
Forms P38(S) and P50 are both available from the Inland Revenue.
Exceptions to these rules are exchange students under the BUNAC (British Universities North America Club) and SWAP (Canadian Exchange Programme) schemes, for whom specific rules apply. Further information is available from the BUNAC website at: http://www.bunac.org.uk/usa/workinbritain/jobs.asp
You should not be liable to pay tax on payments from sources outside the UK that are used to pay for your maintenance, education or training.
NATIONAL INSURANCE
Everyone who works in the UK must have a National Insurance number. It is used to deduct tax and NI contributions. NI contributions are separate from income tax. They are payable if you earn over about £90 per week and unlike tax are non-refundable. However the contributions may enable you to qualify for certain benefits in the future.
How to apply for an NI number
If you were not born in the UK you will need to apply for a number if you are starting work or looking for work. You must contact the NI Allocation Service on 0845 6000643. See separate information sheet for further information or
When you phone this number you will be asked certain questions about your stay in the UK and your intentions. This interview will last 15-20 minutes. There may be a delay of up 2 months before you can be interviewed. After the interview you will be given your NI number in writing as soon as possible. You will receive your NI plastic number card up to 4-6 weeks after the interview.
You are allowed to start work before you have your NI card. Due to the delays in getting an appointment for the identity interview we recommend you apply for an NI number as soon as possible even if you have not already got a job offer. For example, you could show registration with a job agency to prove you are looking for work.
Investment Tax
To avoid paying tax on the interest gained on your bank/building society account, you will have to demonstrate that you are not ordinarily resident in the UK for tax purposes. The bank will probably ask you to complete a questionnaire. Please note that it is only possible to qualify for gross interest if:-
your home, employment and centre of life has always been abroad
and
you are a student who has come to the UK for a period of study or education; you will be here less than four complete tax years; do not buy accommodation for your use (or acquire on a lease of three years or more); and on leaving the UK you will not be returning regularly for visits which average 91 days or more in a tax year.
WELFARE BENEFITS
The UK government allows certain people to claim welfare benefits, which are amounts of money designed to help have additional needs due to reasons such as illness or disability.
Public funds
If you are an international student from outside the EEA and have an immigration condition in your passport of “No recourse to public funds” you are not permitted to claim any of the following welfare benefits.
- Housing benefit
- Income support/Jobseeker’s Allowance
- Working Tax Credit
- Child Tax Credit
- Housing for homeless persons
- Council tax benefit
- Disability benefits
- Child benefit
- Council housing
EEA students and their families
You may be entitled to claim certain benefits. See section on EEA students and their families.
FOOD
If you are sharing accommodation with other students it may be cheaper to share the cost of buying food. Food can often be cheaper if you buy in bulk. The large supermarkets are usually better value than small shops, but the markets in the city centre are even cheaper for fresh produce. Many supermarkets have special offers that change weekly.
BILLS
Electricity & Gas
Fuel bills can be a major problem if you are not accustomed to a particular form of heating system. It can be all too easy to run up a large bill in the winter months that exceeds the amount set aside in your budget. A number of tips may be of use to you:-
• Try and find out the average costs of heating the property from either the previous tenants (if known) or the landlord.
• Electricity is generally a more expensive form of fuel than gas, especially when used to provide heating, hot water and for cooking.
• Spread the cost of your bills over the year by paying monthly. For further information contact your electricity or gas supplier.
• Always read the meters as soon as you become the tenant of a property and give the reading to the appropriate fuel company. Failure to do this may result in you being charged for fuel that you have not used.
There are a number of different gas and electricity suppliers to choose from. You can shop around to ensure that you are paying the cheapest price for these services (always check the standing charge rate as well as the cost per unit). However you must ensure that you check with your landlord before switching to a new supplier as some tenancy agreements prohibit this.
If you are a single student in shared accommodation you will normally share the cost of the bills with the other tenants. Before you accept a supply you should try to ensure that all tenants are named on the bill and therefore have joint responsibility for the bill. If only one tenant is named then they can be pursued by the fuel company for payment. This may cause problems if other students leave the property before you without paying their share.
If bills are included in your rent and the landlord has not paid them, you could be threatened with disconnection by the fuel company.
Although most fuel companies do not ask for deposits, they may do so in some situations, particularly if you have previously not paid your bills on time.
WATER RATES AND COUNCIL TAX
Many tenants now have to pay water rates in addition to their rent. When signing a tenancy agreement check if water rates are included or not. If they are included it could save the household at least £100 per year.
Council Tax
International students and their families are usually exempt from paying council tax. If you receive a council tax bill you should seek advice immediately concerning your liability.
TRAVEL COSTS
In general it is cheaper to travel by coach than train in the UK, although journeys are often longer. There are many ways to reduce the standard fares of both train and coach fares.
Railcards
Discount Rail cards are available from STA Travel in ULU, or from any train station. They are offered to anyone under 26 years old, and also full time students who are over 26. They cost £20 per year and give 33% discount on the price of train fares.
Rail tickets are much cheaper if bought in advance - ask for details of apex, super advance or value fares. Some rail companies offer further discounts if booking via the Internet and will publicise special offers on their websites.
Coach and bus discounts
The main coach company in the UK is National Express, this company also offers a Discount Card. Individuals who are under 26 years old, or in full time education can apply for the card, which costs £10 for a year or £25 for three years. It guarantees up to 30% off standard fares on any of their services. For further information contact National Express on 08705 808080 or http://www.nationalexpress.com
TV LICENCE
The TV Licensing authority requires that the following categories of students buy a license:
• If you live in halls of residence and use a TV in your own room, you will need your own separate TV licence
• You also need your own licence if you sharing a house with students and use a TV in your room and you have an individual tenancy agreement
• If you live as part of a shared house and have a joint tenancy agreement, then you would normally be allowed to have one TV licence to cover all the house irrespective of the number of TVs. Further information is available at: http://www.tvlicensing.co.uk
The current charges are:-
Colour £131.50
You can spread the cost of your payments over the year. Enquire at your local Post Office for details.
The installation or use of a television set without the appropriate licence could lead to a fine of up to £1000 or imprisonment.
If you are experiencing financial difficulties due to reasons beyond your control - for example, due to the problems with foreign exchange control, the death of your main sponsor or a change in the political situation in your home country, you may be able to get some limited financial help.
A number of organisations, trusts and charities exist which provide short-term financial assistance either in the form of a loan or non-repayable grant. It must be stressed that funds are extremely limited and applications made far exceed the resources available. However if you are able to demonstrate a genuine case of financial hardship you may be able to secure some assistance. Whilst all the organisations have their own criteria, generally speaking you must be able to satisfy the following conditions:-
• Your situation is due to unforeseen circumstances
• You are in the final year of study
• You have exhausted all other sources of support i.e. family and friends, your bank or sponsor
It is important that you seek advice from an adviser in your respective college if you think you may qualify for assistance. You will be advised how to prepare an application and how to identify the most appropriate source of assistance.