Eastbourne Citizens Advice Bureau

1
Eastbourne Citizens Advice Bureau Financial
Literacy
BILLS
sponsored by
2
Household expenditure This unit covers the main
areas of expenditure that can be incurred by an
average household. Living independently means
managing your finances and dealing with the
possible complications. It is useful to have an
insight into how bills and expenses function and
the consequences of not keeping your finances in
order.
3
Rent Usually the largest single expense is
housing costs which take the form of either rent
or, when buying your home, a mortgage. Rent is
normally a fixed amount paid at a set time either
weekly or monthly. Most landlords will expect
rent to be paid in advance. Also, when you
first move in you may be asked to provide a
deposit, which is held by the landlord as a
security against any possible damage done to the
property. The amount varies and is often one
months rent. You can rent a house or a flat
(or other type of home) from a private landlord,
housing association or local authority.
4
Tenancy agreement When renting you should be
given a tenancy agreement which spells out your
rights and also states the amount of rent and
arrangements for payment. Not paying your rent
can result in your landlord evicting you from the
property. If you are having difficulty paying
the rent you should discuss it with your landlord
and seek advice. You may be entitled to some
financial assistance such as housing benefit.
Citizens Advice Bureaux can help you find out
more about this.
5
Mortgage A mortgage is a loan taken out to buy a
home. There are many different types of mortgage
available from banks, building societies and
other lenders. The amount you are allowed to
borrow will depend on your income and your
ability to pay. Mortgages are often taken out
over a long period such as 25 years. Interest
is paid on the money borrowed and the amount of
interest can vary.  If you fail to keep up your
mortgage repayments the lender can repossess your
home, leaving you without somewhere to live.
Mortgage protection insurance Mortgage
protection insurance is a way of protecting
yourself against sudden loss or reduction of
income such as ill health or redundancy. If you
are having difficulty making mortgage repayments
you should discuss this with your bank or
building society.
6
Utilities Most homes have an electricity, gas,
telephone and water supply. These are known as
utilities.
Electricity The electricity supply was privatised
during the 1990s, which now means there are a
number of companies who can provide your
electricity. Your home should have an
electricity meter which shows the amount of
electricity you use. When you move into a home
you set up an account with a supply company and
they will take a reading from the meter. From
then on you pay for the electricity you use.
Most homes have a meter which records the amounts
used and a bill is sent to the customer on a
quarterly basis, ie once every three months.
The customer can pay these amounts in full or
arrange for a repayment scheme. Various
schemes are available from each supplier and
these can help spread the costs.
7
Gas Gas supply works along similar lines as
electricity. Some companies offer both gas and
electricity.
Some homes are fitted with prepayment meters.
The customer has a key or card to which they
can add credit at a local shop or Post Office.
The key or card is then inserted into the meter
and this gives credit to maintain the supply.
When the credit runs out the supply is cut off
and more credit must be obtained. Most
prepayment meters offer an emergency supply of
around 5 which enables the customer to continue
using supplies until they can recharge their key
or card.
8
Gas and electricity meters
Gas and electricity meters are usually located
somewhere in the home, and the company will send
someone to take the current meter reading.   The
bill is calculated based on the difference
between the current reading and the previous
reading.   Single rate digital meters To read
a single rate digital meter, write down the
numbers shown from left to right. Ignore the last
figure marked 0.1.   When you next read your
meter, take away the previous reading from the
new one. This will give you the number of units
you have used.
9
Dial meters  When reading
your dial meter, always remember that dials next
to each other go round in opposite directions.
Ignore the red dial at the bottom. It is there
for testing. Read the other five dials from left
to right and note the following points  Always
write down the number which the pointer has just
passed. This is not necessarily the nearest
number to the pointer.  If the pointer is
anywhere between, say, 4 and 5, write down 4.
If the pointer is directly over the figure, say
5, write down that figure and underline it 5.
If one of those numbers in the sequence is
followed by a 9, reduce the underlined figure by
1. Note Before you read your dial meter, check
the direction of the dials.   As with the digital
meter, when you have worked out the new reading,
take away the previous reading shown on your bill
or on your records to find the number of units of
electricity used.
Dial meter
10

Prepayment meters Prepayment meters dont need to
be read to calculate charges. No bill is sent to
you and you dont need an account with the supply
company. All you need is a prepayment key or
card. You can buy credit in shops or Post
Offices and this is added to your key or card.
When you insert the key into the meter the amount
is added to the credit in the meter. The meter
slowly counts down as you use electricity or gas.
Most meters will sound an alarm when the
credit is beginning to run out. Also you can
insert the key or card to receive an emergency
credit of around 5, which is useful at times
when its not possible to visit a shop. It is
a good idea to keep receipts given for credit in
case anything happens to your key or card.
Prepayment meter
11
Economy 7 meters With the special Economy 7
meter there are two rows of figures. One
is for the lower priced night-rate electricity in
the top line. It is marked low. The other is
for the day rate. It is marked normal. When
you read this meter, always check both rows of
figures. Remember to take away the previous
top line reading from the new top line reading.
Do the same for the bottom line. This will
give you the number of night and day rate units
you have used.
Economy 7 meter
12
Estimated bills
Sometimes companies estimate the amount of gas or
electricity used based on what you normally use.
These will be indicated on your bill with an e.
You can pay these amounts or you can take your
own meter reading and give this to the company
which will send you a new revised bill.
13
Standing charge
Some companies will charge you an amount to use
their service, regardless of how much you use.
This is called a standing charge and will be
indicated on your bill.
14
Electricity bill 
This is an electricity bill.
15
Here are your name, address and account number.
16
The lower column shows the meter readings and the
amount of electricity used. This account is on a
dual tariff so the bill is calculated in two
parts.
17
The current meter readings are shown here.
18
The previous meter reading is subtracted from the
current reading to give the amount of units
used. Notice that the previous reading was
estimated as it is marked by an e
19
The number of units used is multiplied by the
cost per unit shown in pence to give the total
charge.   This tariff charges 12.19 pence for
the first 219 units and 7.48 pence for the
rest.   Notice there is no standing charge.
20
The total for this quarter is 116.21.
21
The left column shows the amounts paid so far by
Direct Debit and the dates when they were
paid. Because the last bill was only 68 pence the
account is now in credit by 44.32.
22
VAT (Value Added Tax) at 5 (per cent) is added
to the total charge. 116.21 5.80 122.01
23
The amount in credit is subtracted from the
current total to give the amount due. 122.01 -
44.32 77.69
24

What is VAT? VAT stands for Value Added Tax. It
is a government tax that people delivering goods
and services are sometimes obliged to charge
for. VAT is often already included in the price
but it may be an extra added to your bill when
you buy some goods. You will also see items
advertised at a price excluding VAT so at first
glance they appear cheaper than elsewhere. Look
closer and you will usually see the price
including VAT written in smaller print. Often
when you have services done in your home, for
example plumbing, building or electrical work,
VAT will be charged. You should ask about this
when you get a quote or an estimate for work to
be done as you may end up paying more than you
think. At the moment VAT is charged at 20 on
most things, but for gas and electricity bills it
is only 5. For more information visit
www.hmrc.gov.uk
349 (excluding VAT
199 (excluding VAT)
75 (excluding VAT)
25

Telephone There are a number of telephone
companies which offer landline services in the
home. Most will charge by the minute and also
charge an amount for line rental. You can ask
for an itemised bill which shows every call made
from your phone. This can help you keep a track
of the calls being made. If you notice any
calls which you dont recognise you can contact
your phone company and ask them to explain. In
addition to a landline you may also have a mobile
phone which can either be pay-as-you-go or a
monthly subscription. Competition between phone
companies is very strong and it is worth
comparing their schemes to find the best deal for
you. Not paying your telephone bill can result
in the service being disconnected.
26
Telephone bill 
This is a telephone bill from an online billing
service. It looks very similar to a paper copy.
27
Here are your name, address, phone number and
account number
28
The total charge for telephone calls is 27.36.
You can ask for an itemised list of all the calls
made and how much each call costs. This is sent
to you with the bill.
29
There is a standing charge for line rental which
is 26.80 each quarter.  Added to that is VAT at
20.
30
The total bill for this quarter comes to 63.63
but, as the customer is paying a set monthly
amount, the payments are ahead. Therefore the
balance due is 60.18
31
Water and sewerage rates Like the other
utilities, water and sewerage are run by private
companies. Most homes have two bills one for
the water coming in and the other for the waste
water going out. For some, the bill is a set
amount per year and this can also be divided into
monthly repayments.
Other homes have a water meter which measures
the amount of water coming in. The waste water
also uses this reading to set its annual
amount. You can be taken to court if you dont
keep up with water charges. Water companies
cannot disconnect your supply for non-payment of
bills.
32
Water supply bill
This is a water supply bill. It is for a flat
with a water meter.
33
Name, address and account number are shown here.
34
The previous meter reading is subtracted from the
current meter reading to show the amount of water
used this quarter. 135 - 119 16
35
The account is in credit by 23.88 because
regular payments have been made.
36
The amount of units used (16) is multiplied by
the price per unit (1.02) to give the quarterly
charge. A standing charge of 7.50 is added
totalling 23.82
37
Therefore, as the account is 23.82 in credit and
this bill comes to 23.88 the amount due this
quarter is 6 pence.
38
Council tax
Council tax is a system of local taxation
collected by local authorities. It is a tax on
domestic property. Generally, the bigger the
property is, the more tax will be charged. Any
dwelling in which all the people who live there
as their main residence are students (or students
and people aged under 18) is exempt from council
tax. The amount of council tax payable on a
property is decided by the sale value determined
in 1991. The value is placed within banding,
usually bands A to H, and this gives the council
tax amount.
39
Paying council tax All council tax payers are
entitled to pay their current year's bill by a
maximum of 10 monthly instalments. The number of
instalments will be reduced depending on the time
of year in which the bill is issued. You can pay
yearly, monthly or twice yearly. Further details
on council tax, how it is calculated and where it
is spent can be found on your local authority
website, which for Eastbourne is
www.eastbourne.gov.uk.
Council tax arrears can result in court action
leading to bailiffs being instructed to seize
possessions, which are then sold to recover the
amount owed. A deduction from wages or benefits
can be imposed or, if these fail, you can be sent
to prison.
40
Council tax bill
This is a council tax bill.
41
Here are your name, address and account number.
42
This area shows your council tax band and a
breakdown of the annual amount.
43
The full bill for the year is 852.69.
44
This bill starts from June (because thats when
the person moved in) and runs to the end of the
financial year in March.
45
A single person gets a reduction of 25 per cent.
So the total bill for the year is 501.10
46
The lower part of the bill shows the payment
instructions. It tells you when the first payment
is due and how much.
And how many further payments are needed.
47
Getting a TV licence Everyone who uses a
television set, video recorder or computer, which
is capable of receiving authorised broadcast
programmes (that is the BBC, ITV, Channel 4,
Channel 5, cable television or Sky TV), needs a
television licence. A licence allows the person
named on it and any member of that household to
use one or more television sets, a TV-enabled
computer or a video recorder.
A television licence is not needed if the TV set
cannot receive television programmes and is only
used for closed circuit monitoring, for watching
pre-recorded videos or as a computer monitor. If
you dont have a TV licence you can be prosecuted
and fined up to 1,000. You can buy a TV licence
from the Post Office or online www.tvlicensing.co.
uk. You can pay in instalments and by direct
debit.
48
TV licence bill
 This is a TV licence bill. The customer has
chosen to pay by direct debit.
49
Your personal details are shown here and your
unique licence number.
50
The dates and amounts paid so far are shown,
followed by the amounts due.
51
TV licence form
This is the TV licence itself. It is attached to
your bill.
52
How to pay bills On the reverse side of most
bills you will find details of how to contact the
company in case of any queries or problems. The
reverse will also show ways to pay. These will
include direct debit debit card over the
phone at a Paypoint - many shops offer the
facility for you to pay by cheque at the till
at the Post Office by cash or cheque by posting
a cheque the bill will tell you who to make the
cheque payable to by phone or internet
banking at a bank or building society using a
giro slip (shown in the next slide). Electricity
and gas companies offer prepayment meters as a
way to pay your bill. Most offer a card scheme
which can be used at a Paypoint outlet.
53
Giro
A Girobank payment slip. You will often find
these attached to the lower part of a utility
bill.
54
You sign, enter the date and the amount due and
present it at your bank counter with cash or a
cheque.
55
How to pay council tax Council tax can be paid
by direct debit or standing order debit or
credit card by post sending a cheque at a
Post Office by cash using a special payment card
supplied by the council by personal visit to
pay by cash or cheque.
56
Reminders
If you dont pay a bill on time you will usually
be sent a reminder within a couple of weeks. This
will often have print in red ink. If you think
you will have difficulty paying your current bill
it is a good idea to contact the company and
discuss this with them. They may be able to offer
you a repayment plan to spread the cost. If
you ignore the reminders the company may then
pass the bill to a debt collection agency which
will write to you. They will add their own
charges to the bill. They may phone you or
visit in person in order to try to get the money
from you. If you ignore a council tax reminder
the council can take action against you at the
Magistrates Court.
57
County Court If you ignore the debt collection
agency the bill can be passed to the County Court
where a decision will be made on how the money
will be recovered, depending on the amount and
type of debt. At each of these stages the amount
you owe will increase. Therefore, it is better to
pay the bill at the earliest opportunity or
contact the company if you cant pay. Ignoring
the bill and hoping it will go away will only
make the situation worse. Citizens Advice Bureaux
regularly help people contact companies to sort
out debts. If you need assistance, seek advice.
58
Consequences of non-payment Here is a list of the
possible consequences of not paying your debts
Debt Possible Consequences Mortgage
arrears Repossession / eviction Rent
Eviction Council Tax Items taken / deduction
from wages / prison Gas or Electricity
Bill Supply cut off Income Tax Items taken /
bankruptcy TV licence Fine / items taken /
prison / bankruptcy Telephone Bill Disconnection
You will always be given warning before any of
these consequences and if you act quickly you
should be able to prevent them.
59
Activity Consider the advantages and
disadvantages of various ways to pay monthly
bills. For the following list of bills list the
pros and cons of each means of payment. Not all
options are available for each bill. Decide which
way seems best to you.
60
Bills End