Money saving tips for your holidays

As the holiday season approaches, chartered accountants and business advisers, MacIntyre Hudson offer some money saving ideas to make the most from your fortnight in the sun.

1. The best way to pay for your holiday.

Credit cards can often be the best way to pay for your holiday as they automatically include insurance for purchases over a £100. The credit card company will be equally liable for providing a refund should the holiday be unsatisfactory or should the holiday company go bust. In addition there are many cards offering interest free repayment periods which can allow you to spread the costs of the holiday over the next six months. However it is worth bearing in mind that the surcharge charged by credit card companies is usually passed onto the consumer by travel companies (usually around 2%).

2. Travel money

Many people pay more than they need to for their foreign currency – by shopping around it is possible to make significant savings. Make sure you check exchange rates as well as commission charges and if you plan to use your credit card consider choosing one with no foreign usage loading rather than one with a low APR. Credit cards in particular can work out expensive if you don’t keep an eye on the charges but consequently offer the most room for savings. Most companies levy a foreign usage loading of around 2.75% for using the card and a further 1.5 to 2% for withdrawing cash overseas. In addition many will levy interest from the day the money is withdrawn.

3. Keep hold of your Euros.

If you are travelling to Europe this year then make sure you keep hold of those Euros. Banks don’t usually charge commission when changing your money back to pounds which can appear to make it worthwhile. However it is the banks who are the real winners. The price the bank will pay when buying back your cash is always lower than the price they will charge when selling you your cash. The difference is known as the ‘spread’ and can be as much as 10%. In addition to this the next time you need to change money you will have to pay commission of up to 2% all over again. As the Euro is now accepted in 13 European countries it makes financial sense to hold onto them if you can afford to.

4. Buying that holiday home

If your holiday was so good you just can’t bear to come home here are some helpful tips on buying a holiday home,

• Consider buying it in a trust so that it can be passed on to the children/grandchildren more efficiently while allowing you to retain control
• If you intend to let the property part of the time you may qualify for a number of unfurnished holiday lettings reliefs. You may be able to claim relief for income tax on expenses and lower capital gains tax on its eventual sale
• Again if it will be let consider borrowing as much as possible, as you can deduct the interest from the rental income. If it leaves you with surplus cash you can consider paying off some of the borrowing on your own home which does not get tax relief or invest the money elsewhere.
• Be aware of the stamp duty limits. In some areas there is no stamp duty on properties up to £150,000 but at £250,000 it jumps from 1% to 3%.
• Keep records so that you can claim for all the costs when you come to sell it.
• If you are selling a property consider whether the tax would be lower if it was in the name of both spouses, or a spouse paying little or no tax. You don’t need to own it equally.