manage finances

if you're lending or borrowing money on a formal basis, it's a good idea to create a legally binding agreement to ensure that the expectations and requirements of both parties are set out in advance and fully recorded. a promissory note will essentially create an unconditional promise to have all debts repaid by a certain date. any repayment terms, including the amount to be repaid, the date by which the debt is to be repaid and whether interest is payable, can be set out in this document. for more information, read loan agreements and promissory notes.

there are a number of taxes you should be aware of, including:

• income tax - this must be paid on certain types of income (eg money earned from employment, rental income and income derived from trusts)
• capital gains tax - this must be paid on any profits made from the disposal of certain assets which have increased in value
• inheritance tax - this must be paid on inheritance received over a set threshold
• national insurance - this is a tax on earnings and self-employed profits, which are paid into a fund, from which some state benefits are paid

a repayment agreement can be used where money is owned and the party owing the money is willing to make arrangements for the debt to be repaid. a letter proposing payment in instalments can be used to record an offer to pay off the debt by regular fixed instalments, while a letter accepting payments in instalments can be used by the recipient of such a letter to accept the proposed payment in instalments.

for more information, read repayment agreements.

consumer credit is regulated by the credit consumer act and refers to the arrangement between consumers and lending institutions where a credit or hire agreement is provided. consumers are granted extra protection when they enter into credit agreements with lenders such as the right to pre-contractual information, the right to a 'cooling-off' period and the most relied on protection under section 75 for credit card liability. for further information, read the consumer credit act.