Top tips

This page, which is regularly updated, contains some of our ideas on financial planning and financial markets. Everyone's circumstances are different so please do not take the contents of this page as personal financial advice. Speak to us if you are unsure about anything mentioned here, before taking any action.

If you ever fall out with a gas, electric or phone company, or any kind of lender or credit provider, and they mistakenly say you owe them money, ALWAYS PAY THE BILL ANYWAY, and THEN complain. Even if you are in the right, refusing to pay will seriously damage your credit file, increasing your future cost of borrowing and potentially leaving you unable to buy a house or remortgage. We have seen a disputed £20 phone bill from five years ago add £2,000 per year to a client’s mortgage payments. Even if they later admit that the bill was calculated incorrectly the black mark will probably remain on your credit file.

If you have children or grandchildren (including stepchildren, adopted or foster children), and own your home, then you will get an extra £175,000 inheritance tax allowance if you leave it to your descendants. Your spouse gets this too, meaning that, when combined with the £325,000 of inheritance tax allowance you each had already, couples with children or grandchildren get to leave £1m of assets before their estate incurs inheritance tax.

Absolutely everyone should have a will, even if you don’t have much in the way of assets, or aren’t sure who to leave things too. The alternative is that your estate goes into the intestacy process, which involves courts and solicitors and all that stuff and is a right pain for your loved-ones. Even if you leave it all to the cat, sort it out soon.

Putting your home into a trust for the benefit of your children is being recommended by many companies as a way of avoiding losing it to care home fees in future. However, case law is yet to be established on how well this works in practice. If the council challenges your actions then you could have wasted thousands of pounds. There are also serious potential tax implications, including capital gains tax on the eventual sale of your house, which would otherwise be avoided. Get a good solicitor first!

If you are leaving money to charities in your will, follow two key rules. 1) Don’t name specific charities in the will itself – name them in a “letter of wishes” to a trusted executor instead (this stops the charities hassling the executors, or even challenging the will in court). 2) Leave a percentage of your estate to charity, never a fixed amount of money, in case your estate is smaller than you expect when you die. If you have a large bequest to make, consider setting up a charitable trust on death.

If you have inherited money or property then you can, in some circumstances, change the terms of the deceased’s will in order to reduce the inheritance tax payable (or simply to change who inherits what). You can do this up to 2 years after the deceased passed away, and even if you have already sold an asset that was left to you. This is done via a “deed of variation”.

If you are preparing to get a mortgage, or remortgage, be aware that nothing reduces what you can borrow more than taking on a new car loan (or similar). It might seem unfair, but a £10,000 car loan could easily cut your potential mortgage borrowing power by £50,000.

Investment bonds were very popular until about 10 years ago, and many people still own one. If you want to take money out of yours, be careful, as if you are a higher rate taxpayer you might get smacked with a surprise tax bill. Any profit you have made over the life of the policy will be taxed at 20%+. This tax can be avoided with some forward planning.

Don’t ignore your investment funds. Check how they are performing each year. Use web tools like Trustnet to see if your funds have done better or worse than their competitors, or get independent advice. The effect of high charges or bad performance on your pot over a long period of time can be surprisingly large.

You need to have 35 “qualifying years” during your lifetime to get a full state pension. Years where you are working, a carer, have a child under 12, or receive certain benefits count. If you suspect you might be short of a full entitlement by the time you reach state pension age then you can make extra national insurance contributions (NICs) to fill the gap. Anyone with gaps in their NIC payments over the last 6 years can pay “Class 3” NICs – these cost around £722 per year, and each year you pay them for could add around £200 per year to your state pension when you retire – a great return on your money.

Under current rules you can access your private pension savings as soon as you reach 55 years of age, but from 2028 this will rise to 57. The government plans to keep the minimum age of pension access at 10 years under the state pension age, though is coming under pressure to increase it even further. Some are concerned that people are taking money out of their pension too early.

You don’t have to buy an annuity (a guaranteed income for life) when you reach retirement anymore. Because annuity rates are low most people are instead choosing “income drawdown”, which involves leaving your money invested and taking it out as and when you need it. It’s a bit like taking money from your savings account. It’s more complex than an annuity, but it gives you more control.

If you are about to start taking your final salary pension fund, don’t automatically assume that you should take the maximum possible tax free cash lump sum. We often find that it isn’t worth the pension income you have to sacrifice to get it. Work out how much income you are giving up over your lifetime first.

Independent financial advice, Boston Spa, Yorkshire

Independent financial advice. Regulated by the Financial Conduct Authority (FCA no. 603653). A brand of Dalbeath Financial Planning Ltd (company no. SC450460)