Five New Year Tax Resolutions you could make

The end of the financial year isn’t just a date for business owners or people in finance. It’s a great time for you to take stock of your finances and give them a thorough spring clean in preparation for the year ahead. Here are our five resolutions you could make:

Check your private pension performance

It is always a good idea to keep an eye on your personal pension to ensure your investments are performing as well as they should. If you have never had a private pension assessment by a financial adviser like pension works, then why not do so this year? They will be able to check your pension funds performance, help ensure you are not paying excessive pension fees, or perhaps recommend pension consolidation if you have multiple workplace pensions. They won’t advise you to make any changes unless it’s in your best interest.

Check your benefits

Another good thing to check is what state benefits you might be missing out on. You can easily check how much state pension you are entitled to. If you’re a mother or a carer, you might not be claiming child benefit, especially if you are earning above £50,000 and not expecting to qualify. However, as former Pensions Minister Steve Webb, now at Royal London has warned, this could affect your state pension. You still need to apply so that you receive National Insurance credits to your state pension.(1)

Pay off any debts

Becoming debt-free should be a key part of your retirement planning. You don’t want to be paying off loans or mortgages when retired – and paying off your debts will also give you peace of mind. As well as paying off major debts, like car loans or mortgages, you could make sure any credit card bills are paid off every month in full, so you are not wasting money on interest.

Use your tax allowances

The tax year 2019 – 2020 begins on April 6th. This means that you have until April 5th to make sure you have used your ISA allowance for 2018 – 2019. As ISAs are tax-free, the government limits how much money you can deposit each year. If you have not already invested the £20,000 maximum and can afford to do so, then there are only a few days to go!

If you already are withdrawing from your defined contribution pension, under the pension drawdown option, there is also a limited amount you can get tax-free. Again, this will reset itself at the start of the new tax year, so consider withdrawing earlier rather than later.

Increase your savings

If you have a defined contribution pension, the amount you will get depends on the amount you invest now. Making just a small increase will lead to big gains in the long term, especially if you have some way to go until retirement.

An easy way to fund these contributions is to make savings elsewhere. If you can find a way to cut your regular bills, you can easily put these savings straight into your pension fund. For example, you could check that you are not paying too much on your energy bills (MoneySuperMarket say you could save at least £302.05(2) by switching) or you are not paying phone or internet bills for services you don’t use. Price comparison websites are helpful for this. If you want to stay with your current phone company, call them directly and negotiate, they may put you on a cheaper tariff if they know you are thinking of leaving.

To get free, impartial advice on retirement planning from a directly authorised and regulated by the Financial Conduct Authority adviser, contact us today on 0808 164 2664.

Sources

(1)https://www.thisismoney.co.uk/money/pensions/article-6389309/Steve-Webb-launches-petition-win-state-pension-credits-mums.html

(2)https://www.moneysupermarket.com/money-made-easy/switching-energy-supplier