We’re back in lockdown and it’s the perfect opportunity to tackle some financial priorities. Here are ten to get you started…
1. Create a will
Expressing your final wishes might seem a bleak task, but it’s an important one. Only a will determines exactly who gets what of your estate after death – otherwise State rules apply. And only a lasting power of attorney allows you to choose an advocate to manage your money if you no longer can, perhaps because of an illness such as dementia.
A will can be drawn up at home and completed by witnesses in a Covid-secure way. Companies such as Farewill and Co-op Legal Services can help, or find a local solicitor by visiting The Law Society’s website at solicitors.lawsociety.org.uk. To create a lasting power of attorney, ask your solicitor at the same time as creating a will, or do it online at gov.uk/power-of-attorney.
Finance fitness: We’re back in lockdown and it’s the perfect opportunity to tackle some financial priorities
2. Claim cash
One million households are not claiming Pension Credit they are eligible for and are missing out on an average of £1,700 a year. Pension Credit is a tax-free top-up for a person of State pension age earning less than £173.75 a week, or couples earning less than £265.20 a week.
Homeowners may be eligible and anyone aged 75 or over claiming Pension Credit can also get a free TV licence. Find out more at gov. uk/pension-credit or call the Pension Credit claim line on 0800 991 234.
Meanwhile, companies can pay employees an extra £6 a week for working from home because of coronavirus. This is to cover additional costs such as higher heating bills. If they don’t, employees can claim tax relief worth up to £124.80 a year (£62.40 for basic rate taxpayers) directly from Revenue and Customs. Visit gov.uk/tax-relief-foremployees.
Working parents can open tax-free childcare accounts, which pay up to £2,000 a year per child towards childcare costs. Go to gov.uk/taxfree-childcare.
3. Shift your savings
Savings rates are meagre, particularly from high street banks. But there is a big difference between the best and worst. While Lloyds Bank pays 0.2 per cent on its two-year bond, Zopa Bank’s version pays 1.15 per cent. On a sum of £20,000 that’s a difference of £380 in interest over two years. See tables below or compare accounts at savingschampion.co.uk.
4. Switch utility suppliers
Switching utility providers can save a household a four-figure sum over a year. Jasmine Birtles, founder of self-help money website MoneyMagpie, says: ‘Get switching and give yourself a goal of saving £1,000 over the year. That’s not as crazy a number as it seems.’
The average premium paid for car insurance is at a four-year low and 11million people on standard rate energy tariffs could save £300 a year by changing deals. Birtles adds: ‘Check your broadband, mobile phone contract and home insurance for starters.’
Websites such as uSwitch, TheEnergyShop and GoCompare can help.
5. Build your credit score
Anyone over the age of 18 who has borrowed money has a credit report – a statement of financial behaviour dating back six years. Those hoping to borrow in future should check the health of this report well before asking a bank for money. If a report doesn’t look good, take steps to improve it – for example by registering on the electoral roll. To get a free credit report, visit experian. co.uk or clearscore.com.
6. Get pension advice
Over-50s with a personal or workplace pension can book an appointment with the Government’s Pension Wise service. It is free, impartial and can be done by phone or online. Visit pensionwise.org.uk or call 0800 138 3944. Alternatively, pay for personalised advice from a financial adviser. Visit unbiased.co.uk or use The Personal Finance Society’s tool at thepfs. org/yourmoney/find-an-adviser.
7. Compare bank accounts
It’s hard to divorce your bank, but transferring to a new account can bring a financial reward and better budgeting tools.
Use the industry’s current account switch service which provides guarantees should anything go wrong. More at currentaccountswitch.co.uk.
8. Protect your income
Life insurance, critical illness cover and income protection are financial rescue products. Life insurance is a lump sum paid out to relatives if a family member dies. Critical illness cover pays a lump sum to help people cope with a serious disease. Income protection covers a person’s income if they need to stop working because of illness or an accident. To discuss financial protection with an expert, try lifesearch.com (0800 316 7253) or highclerefinancial.co.uk (01442 234 800).
9. Sell old stuff
A clear-out is good for the soul – and potentially the wallet too. A typical adult has gadgets worth nearly £600 gathering dust at home, according to website musicMagpie which pays cash for people’s unwanted items – including phones, laptops, DVDs and books.
10. Pay your taxes
Self-employed workers, landlords, people with significant savings and some higher rate taxpayers must submit online tax-returns to Revenue and Customs by midnight on January 31. Any tax owed must be paid by the same deadline.
Free yourself from the burden early. Gather up your receipts, bank statements and invoices, take a deep breath, and visit gov.uk/selfassessment-tax-returns.