What do I need to include in my income and expenditure form?
Before you list all of the things you need to account for, you need to know which ones are more important than others and why. Let’s take a look at the sections you’re likely to find in a typical income and expenditure form.
This section is where you would list down any money you receive on a regular basis. This includes:
- Income from employment or self employment
- Working / Child Tax Credit
- Universal Credit
- Job Seekers Allowance
- Income Support
- Housing Benefit
- Any pension payments you receive
- Rent or board you receive
- Any other money you receive on a regular basis, such as housekeeping from your partner or dependants
It’s important that you include all types of income that you’re receiving. Doing so means that the creditor you’re dealing with can have an accurate picture of your situation.
Your priority bills
Your household bills are your most important expenses and must be accounted for on your income and expenditure form. Missing payments on priority expenses can have severe consequences. For example, if you don’t pay or make several late payments on your mortgage you could eventually face repossession proceedings from your mortgage provider.
Priority bills include:
- Rent, mortgage or secured loan payment
- Council Tax (or Rates if you live in Northern Ireland)
- Water (except for Scotland or Northern Ireland residents, as water is included in Council Tax or Rates)
- Other fuel, such as oil, logs or coal
- TV licence
- Service Charge or Ground Rent
- Hire purchases or logbook loans, typically for a car
- County Court judgments (decrees if you live in Scotland or Judgments in Northern Ireland)
- Magistrates court fines (for example TV licence fines or criminal fines)
- Child maintenance
- Arrears on any of the bills listed above
Your other spending
These expenses are still quite important but not necessarily to the same degree as your household bills.
For example, if you cancel your digital TV subscription you may need to pay a bill for breaking the contract. However, the digital TV company wouldn’t be able to impose the same consequences as, say, your mortgage provider if you failed to pay your mortgage on time. The amount left to pay would be classed as a non-priority debt, which we’ll explore later.
Other spending includes:
- Car insurance, tax, or breakdown cover
- Digital television or streaming services
- Buildings and contents insurance
- Life insurance or pension
- Telephone and internet
- Public transport
- Repairs and maintenance costs (such as heating cover or boiler insurance)
- Medical or accident insurance
- Household appliances that you’re renting
- Educational fees
- Church or charity donations
- Union or professional fees
- Laundry or dry cleaning costs
- Smoking costs
- Loans from family or friends
Other living costs
These are costs you usually spend money on from day to day. There are guidelines in place to ensure that you have a minimum amount set aside each month to cover these. A good way to establish your typical spend on living costs is to work out an average based on figures from recent shopping receipts or bank statements.
Living costs include:
- Food costs for you and your family
- Clothing and footwear
- Dentists and opticians
- Sundries and emergencies
- Medicines or prescriptions
- Sports, hobbies and entertainment
- Newspapers or magazines
- School activities and pocket money
- Petrol and parking costs
Be aware that if you’re spending an excessive amount on non-essential living costs, your creditor may ask that you make some reductions in what you spend. However, with costs such as food, toiletries, clothing and footwear, you’re entitled to a minimum amount no matter what.
Your non-priority debts
Finally, you will need to list down the debts you currently owe along with the payment you’re offering to pay towards them.
The amount you offer your creditors is based on how much surplus income is left after you’ve covered your priority household bills, other expenses, and living costs. These are known as your priority debts.
The following items are considered non-priority debts:
- Unsecured loans
- Credit cards
- Store cards
- Payday loans
- Catalogue repayments
- Doorstep loans, such as Provident
- Cancelled contracts (such as gym memberships, mobiles phones and satellite TV)
- Arrears from gas or electric providers you’re no longer with
- Arrears from rental properties where you no longer live
Non-priority debts will become priority debts if the creditor is successfully granted a County Court judgment (CCJ) against you by the court. This is known as a decree if you live in Scotland or a money judgment if you live in Northern Ireland. Should this happen, you’re still in a position to negotiate a payment that’s realistic for you.