- Wealth management
Christmas is a time of great joy, but also requires great planning. Whether you’re an early Christmas go-getter, or prefer just 12 days, we look at some surefire ways to get your finances in order for the busiest time of the year.
Christmas is expensive, with household spending 25% higher in December than any other time of the year, according to the ONS. As inflationary prices and high interest rates reduce spending power, coupled with a pressure to spend, Christmas can become a money worry and contribute to mental health suffering at this time of year .
Be free to enjoy the season by planning ahead: ideally, having a well rounded plan which keeps your finances in shape throughout the year, so that that your money is working harder for you all year long. A professional can help to review your finances, create and manage savings and investments, and make sure everything works tax efficiently, giving you peace of mind when you need it.
For many, Christmas is a time to think about tax, of all things*. With the deadline for self-assessment falling at the end of January, many are thinking about their potential tax bill at this time of the year, as well as Christmas spending. To file accurately and to ensure you are claiming all allowances and deductions, it is worthwhile speaking with a tax professional. Remember that your accountant’s filing charge is tax deductible, so is considered a ‘good cost’. And along with your financial advisor, any tax saved is more money for you – particularly good news at this time of year.
*On Christmas Day 2017, 2,590 people decided to file their online tax returns, according to HMRC – The Twelve Stats of Christmas | National Statistical (ons.gov.uk)
Thinking about giving cash to family or loved ones this year? Or, is the value of your estate running close to, or over, the inheritance tax limit? Gifting cash is an ideal solution in several ways: it avoids the conundrum of what to buy, it can reduce your inheritance tax liability, and can improve your loved one’s financial wellbeing and enjoyment.
But getting it wrong could undo the good deed by ending with a tax bill for you or your beneficiary. A few tips will help to ensure that you stay ahead of the tax rules:
Thinking of gifting high value items such as fine art, wine or whisky? The value of these is also considered part of your estate for inheritance tax so the rules could also apply.
However, there are a number of benefits: these gifts can be highly personal and items to treasure, as well as holding monetary value; with careful selection, these can increase in value as the years go by, and could result in significant wealth to your loved one in the future; and they can add an element of diversity to your loved one’s collection of assets, which can reduce their exposure to risk.
Investments can make good gifts, particularly for someone who is interested in investing but doesn’t have the capital to get started. Premium bonds can be bought by anyone aged over 16, and parents, legal guardians and (great-)grandparents can invest on behalf of their child or grandchild aged under 16. These don’t pay interest, but do go into a monthly prize draw for a chance to win tax-free prizes of up to £1million.
Investments can be highly personalised to suit a company or area which your recipient is particularly interested in – for example, if they support initiatives which improve society or the environment, or if they’re interested in a particular tech, software or app. However, due to the element of risk and the anti-money laundering rules involved to set up an investment, we would always recommend that investments are carried out under professional guidance. For Christmas, this could mean giving a temporary gift of cash along with an appointment to see a trusted financial adviser together, so that you can be involved in your loved one’s investment selection.
Remember that investments carry an element of risk, so they could lose some or all of the amount of the gift; they are a long term commitment, so are best when funds do not need to be accessed for at least 5 years; and values are likely to fluctuate throughout that time.
At this busy time of year, it is important to stay alert for identity and financial fraud. With the huge demand created by online shopping, there is heightened risk of online shopping fraud (including marketplace and pre-loved swap/sell), staying secure online, parcel delivery scams, charity scams, social media scams, and e-card viruses. It pays to be on your guard: always question unsolicited calls, texts or emails requesting your personal or financial information
At this time of year when we think about loved ones, it is worthwhile taking a moment to reflect on your will, and whether it provides for their long term financial security. Sadly, statistics show that this time of year carries a death toll, and catches many families unaware.
Statistically, the post-Christmas period is when most relationship breakdowns occur. Intense periods of time together in confined quarters, along with the pressure of relatives and creating the ‘perfect’ Christmas, can take its toll.
If you are feeling relationship strain, don’t suffer alone. Relationship experts can help in person, by telephone or online 365 days a year.
If your situation is beyond reconciliation, please see a financial expert as soon as possible. Many will provide a complimentary initial meeting and a confidential discussion, and they will be able to provide you with guidance and options to consider and potentially discuss with your partner.
Review your home insurance policy for buildings, contents and accidental damage cover. Fire damage claims surge in the weeks before Christmas, and winter weather damage can interrupt even the best planned occasion. Most policies won’t cover building damage resulting from maintenance issues or wear and tear, so take the time to inspect, repair and renew essential spaces such as roof and heating before the busy season arrives. For Christmas gifts, most policies will provide temporary enhanced cover, but may not include high value items. It pays to check your home insurance policy to understand your cover and any exclusions as early as possible.
If you own or run a business, you will have additional expenses at this time of year such as paying staff a Christmas bonus, additional annual leave, and an impact on earnings if closing the doors over the festive period. It is useful to know which expenses are tax deductible, ensuring your business profits stay in good shape.
For yourself as a key person, do you have the right level of health, illness and life cover in place should anything happen to you over the Christmas season? With 5 million people holidaying overseas in December, and many more domestically, it is important to take care of yourself, too, in case anything unforeseen happens.
Give the gift of a secure financial future: a meeting with a financial adviser. The value of a good financial plan is a gift for all generations, for life.
To talk with us about your financial planning, tax or estate planning, please don’t hesitate to contact us. We are delighted to help.
Content on this page is provided for general information and is subject to change and does not constitute advice.
If you would like to know more for your own situation, please do not hesitate to contact us.
We would be delighted to discuss this with you in more detail, taking your circumstances into account.