TEN WAYS TO CHANGE YOUR FINANCIAL HABITS IN 2017
For many, the start of a new year is a time of reflection and a renewed determination to do things differently in the months that lie ahead. Whilst overhauling your finances could seem less exciting than taking up a new hobby or challenge, it could make a big difference to your future wealth.
CHECK YOUR MORTGAGE
Often a family’s biggest monthly outgoing, it makes sense to check that you’ve got the best, most cost-effective deal for your circumstances.
MAKE PENSION SAVING A PRIORITY
You’ve probably heard this message many times before, but experts agree that the earlier you start saving in a pension, the more you can put into it, the more time your money has to grow. With tax relief available on contributions, pension saving really is a no-brainer.
DON’T MISS OUT ON TAXRELIEF ON YOUR SAVINGS
If you haven’t used your ISA allowance for this tax year (£15,240) then you still have time. Depending on your circumstances, you might want to think about a Help to Buy ISA or a Lifetime ISA when it launches in April.
DON’T AUTOMATICALLY RENEW YOUR HOME INSURANCE
Shopping around at renewal could get you a better, cheaper deal that provides the right cover for your needs.
KEEP YOUR CREDIT CARDS AND LOANS UNDER REVIEW
It pays to know what interest you’re being charged and to check if another provider offers a lower interest rate.
CHECK OUT YOUR BANK ACCOUNT
Many banks offer new customers valuable incentives to move their accounts. If you’re currently paying a monthly fee, it pays to check out that the extras you get by doing so represent good value for you.
MAKE YOUR WILL
Without a Will, your estate would be administered under the laws of intestacy, meaning that your wealth might not go to those you would like to benefit on your death. Will writing is not regulated by the Financial Conduct Authority.
GET GOOD ADVICE
When it comes to managing and planning your money, it makes sense to
get good quality, in-depth advice from a professional. If it’s been a while since you looked at your finances, then why not schedule a review?
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
BREAKING UP IS HARD TO DO – YOUR FINANCES ON DIVORCE
It’s a sad fact of life that long periods of time spent with their other halves over the festive season can prove to be the final straw for many married couples.
When divorcing, couples are encouraged to come to an amicable arrangement of their finances through mediation. Whilst there are no hard and fast rules about how their assets should be divided, the broad starting point is a 50:50 split. If the couple can’t agree, then the court will be left to decide how things should be apportioned between them taking into account factors such as their age, earning ability, the property and money they brought to the marriage, and their role and relationship within the marriage. Above all, the court looks to ensure that the needs of any children involved are fully considered.
THE MARITAL HOME
The property can be sold and the proceeds divided, or one spouse can buy out the other’s share. If there are children involved, a parent will often want to remain there with them. This means that any existing mortgage arrangements will need to be reviewed especially as the other partner may wish to buy their own property.
Many spouses are unaware that a pension doesn’t belong solely to the party named on the policy and has to be apportioned along with other assets. Pensions can be dealt with in various ways, such as splitting the fund into two, arranging for a portion of the pension paid to go to the other spouse, or offsetting the value of one spouse’s fund by transferring other assets to the other spouse.
PLANNING FOR THE FUTURE
Post-divorce, it makes sense to discuss your revised circumstances with your financial adviser. You’ll need to reassess your financial goals and review your mortgage, life insurance, savings and investment plans. You will also need to remake your Will. Reorganising their finances is for many an essential step in moving forward to a new life.
PAVING THE WAY FOR A “MATCH FIT” UK
In light of slower growth forecasts and an undeliverable surplus by 2020, the Chancellor used the Autumn Statement to announce his plan to ensure the UK economy is “matchfit” for Brexit. Following hefty infrastructure and innovation investment announcements, housing and regional funding measures, he slipped in a few extras including a further increase in Insurance Premium Tax and a ban on letting fees for tenants; following consultation, the landlords alone will be liable.
In a positive reconfirmation he announced that the personal allowance will rise to £11,500 this April and then to £12,500 by 2020. In addition the higher rate threshold will rise to £50,000 by the end of this parliament. The government also has no plans for further welfare savings measures in this parliament beyond those
already announced, crucially protecting the triple lock arrangement.
A BIG SACRIFICE FOR SOME
The Chancellor promised salary sacrifice would be taxed as normal from April; however, pensions contributions, childcare vouchers, the cycle to work scheme and ultra-low emission company cars are excluded. Items bought under the scheme such as computers, gym membership and health screening will be subject to tax.
INTRODUCING BOND, A NEW SAVINGS BOND
The Chancellor expects two million people to benefit from a new savings bond which will be launched through National Savings and Investments in April. With an interest rate of around 2.2% and open to those aged 16 and over, the minimum investment limit is £100, with a maximum investment of £3,000. Savers must lock in their money for three years. The new product will be available for 12 months.
For those who have already flexibly accessed their pension, the Money Purchase Annual Allowance may be limited to £4,000 from April. This is designed to stop beneficiaries from gaining double pension tax relief.
The tax treatment of UK residents’ foreign pensions will be brought more closely into line with the UK’s current domestic tax regime, bringing any pension payment or lump sums into the UK for tax purposes.