With measures to combat coronavirus set to continue until at least the end of the year, it’s likely that you will continue to spend more time at home in the coming weeks.
So, if you find yourself with more time than usual during this period, it could be a great opportunity to review those financial tasks you may have been putting off.
Here are nine financial tasks you can tick off your ‘to-do list’ during the pandemic.
Write a will and establish Power of Attorney
If you haven’t got around to writing your will or establishing a Lasting Power of Attorney (LPA), now is the time. The Independent reports that legal firms across the country have reported dramatic increases in enquiries about wills as Brits urgently review their arrangements.
If you already have a will it is sensible to review its contents and ensure it is still fit for purpose. Quite often wills have been made many years before and your or your chosen Executors’ circumstances may have changed significantly. A solicitor will be able to assist in making any changes which may not involve rewriting the will but adding a simple codicil.
Solicitors can continue to take online instructions, but wills still need to be witnessed while respecting social distancing measures (perhaps get a neighbour to do this at a reasonable distance).
In terms of establishing an LPA, again this can be done via a solicitor perhaps through video conferencing. The Office of the Public Guardian (OPG) indicates that you can still set up an LPA while observing government guidance on social distancing and self-isolating. You can also find out more on the government website.
Obtain a State Pension forecast
In 2016, the government introduced the new State Pension. Your entitlement is based on your National Insurance record, with the full pension requiring 35 ‘qualifying years’.
It is not uncommon to find errors in your State Pension forecast especially for those that brought up a family and not received the appropriate credit. It is therefore important from a planning as well as an accuracy perspective to establish exactly how many qualifying years you have, what State Pension you are entitled to and when you will receive it, head online and obtain a State Pension forecast.
Consider making gifts
With millions of workers laid off or furloughed, there may well be someone close to you who needs financial support. Remember that making a gift is usually classed as a Potentially Exempt Transfer for Inheritance Tax (IHT) purposes, meaning that if you were to pass away within seven years of making the gift, it would form part of your estate for IHT purposes unless the gift qualifies for an exemption.
You can make use of your annual IHT exemption of £3,000 per tax year. This means you can gift £3,000 this tax year, and this gift is immediately exempt from your estate for IHT purposes. You can also carry forward the previous year’s allowance, meaning that if you did not use your £3,000 exemption in 2019/20, you could gift £6,000 now.
Each tax year you can also gift up to £5,000 to your child on the occasion of their marriage or civil partnership. You can gift £2,500 to a grandchild and £1,000 to any other person.
Finally, if you have excess disposable income you could also consider making gifts out of income. These gifts could be exempt from IHT as long as you make them from disposable income, the intention is to establish a regular pattern of gifting, and they do not adversely impact on your standard of living.
Make charitable donations
Estimates suggest charities are facing a £4 billion shortfall due to the coronavirus pandemic. So, now is a great time to support charities, many of whom are struggling to raise funds due to the closure of shops and the cancellation of popular fundraising events.
If you are a UK taxpayer, you can normally apply Gift Aid to your contributions when you make your donations. By doing this, the charity you are donating to receives an extra 25%, at no cost to you.
If you pay higher or additional rate tax, you can also claim the difference between the rate you pay and basic rate on your gross donation (i.e. the donation amount after Gift Aid is applied). Remember to make a note of the donations you make so that you can apply for the additional relief on completion of your Self-Assessment tax return.
Make an ‘in case of emergency’ (ICE) document
If something were to happen to you, does your family know where all your important documents are kept? If not, you should consider making an ‘in case of emergency (ICE)’ document which contains details such as:
- Where your documents are kept, including your will, Power of Attorney, and all insurance policies
- Who your wealth manager, financial planner, accountant and solicitor are, with contact details
- Where to find investment certificates, bank cards, savings passbooks etc.
- Anything else you think would be relevant this might include any passwords for online accounts or documents.
Your HFMC adviser team will be very happy to help you complete your own ICE document utilising our new ICE document template. We will usually have much of the information needed on file. Our new digital portal we are developing, HFMC Connect, is the perfect place to easily upload your ICE document and all associated key documents, making them accessible to you online at any time in a secure fashion. Please ask your HFMC adviser if you would like us to help you with this .
Check you are up to date with recent announcements
In recent months, the Chancellor has announced a range of measures designed to support the UK economy during the coronavirus pandemic. It is important that you are aware of the support that is available to your business, and to apply for assistance.
Our Insights page contains comprehensive guides to the support that is available, so head over to the HFMC website to find out what may be relevant to you/your business.
Look after your cash savings
A number of banks, including Barclays, HSBC and NatWest have relaxed their rules on accessing money in fixed savings accounts to help people with their cash flow during the crisis. If you need to take advantage of this, now is the time.
If you do have savings in various accounts, there’s a chance they could be paying paltry rates of interest right now following two Base rate cuts in March. An alternative is to use a ‘cash management’ service which gives you access to the whole savings market, offering hundreds of savings products within a single sign-up process.
You can use the service as an individual, company, charity or trust and it gives you the ability to actively self-manage your cash savings. Bespoke solutions can be created to balance your individual priorities for security, liquidity and return. By using multiple accounts, the cash platform removes the hassle, and you benefit from greater FSCS protection and higher yields. Find out more.
Plan a budget
With all this extra time on our hands, now could be a good time to go through the exercise of seeing what you normally spend. While in lockdown you are likely to save costs on some expenses, such as parking, petrol, train fare, coffees, eating out and entertainment.
You may find there are direct debits you can cancel or that you currently have surplus cash as a result of curtailing your spending. This gives you the perfect opportunity to start a new savings arrangement, make gifts out of income to a loved one, or donate to your chosen charity.
If you would benefit from assistance with budgeting tools or cashflow planning, please speak to your HFMC adviser. Which brings us to…
Chat to your HFMC planner
If you have time to put your financial affairs in order during this time, we can help. Other jobs that your HFMC adviser can help with include:
- Reviewing your pension beneficiary nominations
- Reviewing old insurance policies
- Considering new insurance policies – in particular, if your circumstances have changed as a result of the current economic environment
- Collating lost pension arrangements
- Utilising your pension and ISA allowances.
If any of these tasks are outstanding, or you’d benefit from a financial review, we can help. Please send us a message via the HFMC Wealth website or call us on 020 7400 4700.