September, 2013

The five biggest ways to save on food shopping

save on food shopping

Guest blogger Penny Golightly shows you the most effective ways to save money when you go food shopping.

Forget supermarket loyalty points, coupons and free gifts – these are the biggest ways to reduce your monthly supermarket grocery bill.

Make a menu

Planning your meals for the week can save you a small fortune, and it’s easily one of the most effective ways to minimise your food budget. Start by checking your diary to see which days or evenings you’ll be out, then look around to see what you already have in your fridge, freezer and food cupboards to see what you can use up.

Top menu tips:

  • It’s easier to eat healthily on a budget if you plan ahead
  • Try to have a mixture of simple and complicated dishes
  • Scheduling in favourites makes you look forward to dinner time
  • Home cooking is cheaper than most convenience food
  • Cook double portions sometimes and freeze for home made ‘ready meals’

Take a shopping list

Supermarkets are very clever at selling us things we might not really need. It’s easy to be taken in by special offers that don’t offer real value, and a shopping list can help you avoid making impulse purchases. It can also help you get around the supermarket much faster if you’re shopping in person, which is a real bonus when the shop is busy.

The other great advantage of a shopping list is that you’re much less likely to forget something – having to make return trips to the supermarket can lead to further impulse purchases, so that’s good to avoid.

Learn new ways to avoid food waste

According to food experts Love Food Hate Waste, the average British person throws away 120kg of food each year, most of which is wasted needlessly. This makes a huge contribution to your regular food bill, with about £480 being wasted per person per year.

In families with children, this means about £50 is being wasted each month. That’s far, far more than you could ever save with loyalty points or coupons.

Fortunately there are many simple, effective ways to reduce this waste, such as:

  • Portion control (only cooking what you need)
  • Careful refrigeration and other storage
  • Freezing leftovers and knowing how to safely re-use them
  • Regularly checking the use-by date of food in the fridge

If you’d like to know more, have a look at Love Food Hate Waste.

Have zero brand loyalty

It’s human nature to stick with products that we know and like. The big brands know fully well that we’re creatures of habit, and they price their goods accordingly.

Fortunately most bestselling branded groceries have now have supermarket own-brand equivalents, and the majority of them are remarkably similar in taste while being significantly lower in price.

Buying new products might feel risky, but it’s easy to research them and find reviews online. Try consumer websites to see lots of people’s opinions, or visit a specialist review site, such as this one which has been set up by a food critic who says “it’s not cheap if you can’t eat it!”

Other ways to save by shopping around:

  • Many ‘value’ ranges are great, especially for rice and pasta
  • Avoid supermarket own-brand luxury ranges
  • Use budget supermarket chains sometimes
  • Buy fruit and vegetables at street markets or indoor markets

Avoid paying tax on your groceries

Well, we couldn’t have an article that didn’t mention tax in some form, could we? It’s important to remember that many foods and drinks have 20% standard-rate VAT added to their sale price, which can bump up your grocery bills considerably. Eat and drink less of them, and you’ll make big savings.

What’s on the 20% VAT list? In summary:

  • Alcoholic drinks
  • Confectionery
  • Crisps and savoury snacks
  • Home-brewing and wine-making products
  • Hot food and takeaways
  • Sports drinks
  • Items sold in catering such as ice cream, soft drinks and mineral water

Most of these taxed products aren’t good for you in large amounts (apart from water), so saving cash here might also make you healthier.

For the full list of food that attracts standard-rate VAT, see the HMRC official website.

Are you paying the right amount of tax on your rental income?

If you are a landlord and own a rental property, you probably have to pay tax on your rental income. However, a new campaign by HM Revenue and Customs is targeting up to 1.5 million landlords who may have failed to pay or underpaid the tax that they owe.

HMRC estimates that landlords are underpaying by around £500 million each year. So, we look at when you have to pay income tax and what the repercussions are if you don’t pay the tax that you owe.

How to work out if you should pay tax on your rental income

Many landlords earn significant income from rental property, particularly if their homes are in London or the South East. The graph below shows the average rental income in the UK regions and even in the areas that generate the least rental income landlords can expect to earn in excess of £6,000 a year from rental income.

 Average monthly rents in UK

If you earn rental income then the tax you will pay is worked out as follows:

1. Add up all the rental income you receive from your rental property/properties

2. Add up all your allowable tax expenses (as detailed below)

3. Take your allowable expenses from your income

Your allowable tax expenses include mortgage interest payments, lettings agent’s fees, buildings insurance, repairs and maintenance to the property, ground rent and service charges.

If you are an employee on PAYE and your net profit from property is under £2,500, you do not have to complete a self-assessment tax return.  Your tax code can be altered to claim the tax you owe.  You will have to complete HMRC form P810 every year.

If you are not on PAYE, or it your net profit from property is above £2,500, you will have to complete a self-assessment tax return.  If your net profit from property is under £77,000 you can group all the income and expenses as one figure on your tax return.

If your total income from UK property is over £77,000 (20012/13) or more in a tax year you must declare it on the property pages of your Self Assessment tax return and show your expenses separately.

HMRC targeting landlords who haven’t paid the right tax

If you have not paid tax on your rental income then you may be able to take advantage of an 18 month tax amnesty. HMRC have announced that penalties on unpaid tax will be reduced for those landlords that come forward and have warned that anyone who fails to pay tax could face criminal proceedings.

Marian Wilson, head of HMRC Campaigns, said: “All rent from letting out a residential property or holiday home has to be declared for income tax purposes. Telling us is simple and straightforward.

“We appreciate some people will have made honest mistakes, and some may not be fully aware that the rent from a property is taxable, and that is why it always makes sense to talk to us so we can help. It is always cheaper to come forward voluntarily and pay the tax you owe, rather than wait for HMRC to come calling.

“The message for all landlords owing tax is simple – it is better to come to us before we come to you.”