The ongoing coronavirus pandemic and the UK’s withdrawal from the EU mean that getting your finances in order is more important than ever this year.

Lockdown might just give you the extra time you need, so here are the three steps you can take now.

1. Plan ahead and get ‘tax year-end’ ready

Plan ahead and we can help you get tax-year end ready early this year. The financial uncertainty of the pandemic has led to a busy period for providers. If you want to use up your allowances before tax year-end, make a start during the current lockdown and don’t leave everything until March.

• ISAs

For the 2020/21 tax year the ISA allowance is £20,000. This is split across all ISAs you hold, but it can’t be carried forward. If you don’t use it, you will lose it.

Also, be sure to make the most of the Junior ISA allowance if you are saving for a child or grandchild. The JISA allowance is currently £9,000 and as with the adult ISA, this can’t be carried over.

• Pensions

The Annual Allowance is £40,000 (or 100% of your annual earnings, if lower). This is the amount you can pay into your pension during a tax year and benefit from tax relief. This is across all schemes and includes contributions made by your employer and any other third party.

As with ISAs, pensions are tax-efficient, so make the most of the Annual Allowance and top-up your pension if you can afford to. Unlike the ISA, unused Annual Allowance can be carried forward for up to three years. Use any three-year-old allowance this year or it will be lost.

Be aware that a different allowance might apply if you have flexibly accessed Defined Contribution (DC) benefits or you are a high earner.

Contact us if you are unsure which applies to you and we can help you make the most of whatever allowance is available.

• HMRC gifting

If you are worried that the value of your estate might leave an Inheritance Tax (IHT) liability, you might have considered ‘giving while living.’

Make the most of available HMRC exemptions to cut down on a tax bill.

The annual exemption is £3,000 for the 2020/21 tax year and you can gift up to this amount tax-free. You can carry this exemption forward for one year and it applies per individual. This means a couple could gift up to £6,000, or £12,000 if neither of you used your exemption last year.

2. Get on top of your retirement planning

As the threat of redundancy continues and business insecurities grow, lockdown means more time to locate your old pensions and to put a retirement plan in place to help you escape work now.

• Locating ‘lost’ pensions

If you have many old workplace or private pensions, you might have lost touch with some providers.

You might not be sure whether you still have a pension entitlement or if you do, how much your pot is worth. Use your extra time this month to visit the Pensions Tracing Service to track down details for your former pension providers.

• Consider consolidation

You might consider the benefits of pension consolidation. Putting all your plans into one place means only one scheme provider to deal with and only one set of paperwork for your whole pension pot.

There are downsides though. A larger pot might mean more tax to pay. You might also be charged for transferring and lose valuable benefits attached to older plans, such as guarantees or escalating payments that combat inflation.

Get in touch and we can help decide if consolidation is right for you.

3. Remember Brexit

The UK has now left the EU so use lockdown to find out what Brexit means for your travel plans this year and how to budget for these changes.

UK citizens visiting Europe will only be able to stay in most EU countries for a limited period without a visa. As a tourist, you can stay for up to 90 days in any 180-day period. The same rules largely apply if you own property in an EU country in which you are not officially resident.

Different rules exist for Bulgaria, Croatia, Cyprus, and Romania.

Other changes to consider include:

• New passports

A new passport will be needed if your current passport is over ten years old or has less than six months left on it. The government recommends applying for a new passport early in case of delays.

• Health Insurance

Your current European Health Insurance Card (EHIC) is still valid until its expiry date. A replacement UK Global Health Insurance Card (GHIC) is set to be released in due course.

• Pet passports

You can no longer take your pet to the EU using a UK-issued pet passport. You will instead need an Animal Health Certificate (AHC), issued by a vet.

Get in touch

If you would like to use lockdown to get yourself into the best possible financial position for the new year, get in touch. Please email enquiries@futureplanningwm.co.uk or call 01793 575553.