Average UK Debt Hits £8,000
29th November 2017
With interest rates finally starting to rise for the first time in over a decade, it makes sense that people are thinking about what they owe. According to research from comparethemarket.com, it turns out to be quite a lot.
On average, the report says, the typical Brit is carrying around a debt of around £8,000. Keep in mind that this doesn't even include any mortgages they're paying off. We're largely talking about loans, credit cards and so on. Those debts can be hard to shift, and there's no sign of them easing any time soon. In fact, many of the people surveyed say they're considering making their burdens even heavier. A full third of them are actively thinking about borrowing even more next year to keep themselves afloat.
All told, about 6 million people in the UK can't imagine ever being debt-free in their lifetimes. 10% of us have hit credit card limits or gone overdrawn in the last 12 months. On top of that, 4 million have had serious financial trouble and close to 25% are just about getting by. The worst hit seem to be people in the 25-35 age bracket, with a long and painful economic downturn dominating much of their working lives.
Well over 25,000 people were actually declared insolvent this summer alone – that's about 275 people per day! It's worth mentioning that “insolvent” isn't the same as “bankrupt”. Many of the people affected are taking up Individual Voluntary Arrangements (IVAs) to pay off their debts over time. They're more flexible than bankruptcy, and give you more control over your assets. It's still a situation you're better off never falling into in the first place, though.
It's being called a “time bomb” of debt, featuring £200 billion of credit card balances, car financing and unsecured loans. The recent interest rate rise was pretty minor at 0.25%, but some people will start to feel the impact soon. The best mortgage deals might get a little less appealing, for one thing. Sadly, those “helpful” suggestions from estate agents that people buy fewer sandwiches to save for house deposits probably won't put much of a dent in that problem.
At RIFT, we often help with people get out from under the weight of their debts. Late last year, one person called us after missing a Self Assessment deadline and catching a nasty penalty from HMRC. His fine was sitting at over £1,300 when he came to us, with every prospect of going higher. We moved quickly to sort out his overdue tax return, but were able to do a lot more besides. In addition to getting his tax debt squared away, we managed to land him a major refund from HMRC. All told, he enjoyed that Christmas holiday debt-free and about £1,500 richer than he went in.
Another person had been stung by a fraudulent accountant before discovering RIFT. When he came to us, he already owed £20,000 to HMRC and was looking at bankruptcy. We got his tax returns up-to-date and chopped that debt down to just £6,000, but we're not stopping there. We're still working with him to bring down what he owes even further and protect him from being declared bankrupt.
If you're loaded down with debt, it's important to know that there are organisations and services available to you. Turn2us.org.uk can help you check if you're getting all the benefits you're entitled to, for instance. Citizens Advice can offer free guidance on handling debt, and charities like StepChange have a lot of great resources to offer.
Remember that claiming a tax rebate is one of the most important ways of clawing your way out from under debts. In fact, whatever problems or questions you have about tax or tax returns, get in touch with us. RIFT is the best in the business at tackling the taxman, and we're always here to help.