Christmas to do list

Christmas to do list

Photo by Annie Spratt on Unsplash

It’s that time of year again and, as in previous years, here’s my list of things you could do over the festive period if you have some spare time – and given the restrictions, you might actually have more than in previous years!  So, take some time to relax, try and get 2020 out of your system and then you might want to consider some, or all, of the list below.

As I’ve suggested in previous years, if you do manage to get some time, it’s a good opportunity to tackle the list of jobs that never seem to get done.  As always, I’m not saying that any of these are a fun way to spend your time, but they are all probably worthwhile.

The dreaded tax return

Definitely not the most fun thing to do, but it needs doing before 31st January if you haven’t already submitted it.  You might not think that you need to submit a return under self-assessment but even if you’re paid via PAYE there are reasons to complete one, for example:

  • If you or your partner receives child benefit and either of you earns over £50,000pa, you might need to do so to pay any child benefit tax charge that could be due.
  • If you pay pension contributions into a personal pension or group personal pension and are a higher rate taxpayer, you might need to use self-assessment to claim the higher rate relief on your contributions or disclose if you have exceeded the pension annual allowance.


Why not get it done now when you have some time rather than leave it nagging at you until right before the deadline?  If you have an accountant or tax adviser who does this for you, they’ve probably already asked for all the data they need from you and you could collate all this information and send it to them in early January.  They usually have a very busy January period, so the sooner you do this the better.

The money talk

Rather than relaxing in front of the usual Christmas TV programmes and re-runs that we’ve all seen before, why not turn the TV off and talk to your partner about money!  Sounds like fun doesn’t it?

I’m not suggesting you give each other a lecture about overspending, but rather that you talk about each of your goals in life that are money-related (and most are).  When did you last talk about what’s important about money for each of you or what you want to do in later life?  Have you ever had this type of conversation?

It’s important for both financial planning and a stronger relationship to talk about these things.  It might be that one of you has an ambition to do something, but you have never discussed it before because of concerns about the costs.  You might have different ideas about when you want to stop working and what a ‘good future’ looks like.

Getting these things out in the open can be difficult but also rewarding and it’s only by discussing these issues that any meaningful and joint planning be done.

If you find this conversation very difficult, then it might be easier to engage with a financial planner who can help you have this discussion.

Expenditure check

I’ve mentioned this before, but the end of the calendar year could give you another opportunity to work out an idea of what your current lifestyle costs.  This allows your financial plan (if you have one) to be constructed based on some degree of reality and what you spend now can be used as an indication of the cost implications of what you might like your lifestyle to look like in the future.

I’ve previously written (in Expenditure – what do I spend) about how to calculate your expenditure and there aren’t many short cuts.  Downloading bank account transactions to a spreadsheet is usually the most accurate but pay attention to funds that are just moving around between accounts to avoid double counting.

Capital Gains Tax (CGT) check

Given the possibility of an increase in taxation to pay for the impact of this last year, you might wish to check if you have any gains in your portfolio that could be realised before the next budget.  For more information about possible tax rises please refer to Tax Rises?

Investment portfolio rebalance

If you currently manage your own investments, now is a good time to look at the overall asset allocation and decide if you need to rebalance your portfolio.  The asset allocation is the split between growth assets (equities and property) and defensive assets (cash and fixed income securities).  Again, this isn’t necessarily a straightforward task; however, it’s essential for any good investment process and it is good discipline.

Rebalancing your portfolio periodically ensures that the level of risk of the portfolio is in line with that which you’re happy to take.  It’s very easy for a portfolio to get out of kilter and you don’t want to realise after the next market correction that your portfolio had drifted to a level of risk you aren’t comfortable taking, and it incurred a greater fall than it would have if the asset allocation you intended had been maintained.

Wills

When did you and your partner last review your existing wills to see if they still reflect your wishes?  If you don’t have wills, then this is a great time to discuss what you might like to include in them and you can then contact a solicitor in the New Year to get them drafted.

A will is an essential document that ensures your financial affairs are left well organised on your death and that your wishes are carried out.

Lasting powers of attorney (LPAs).

LPAs are important documents as they allow someone to make decisions on your behalf should you be unable to do so.  For more information about LPAs please refer to Lasting powers of attorney.

An important decision when considering LPAs is who your attorneys should be, so whilst you have some time give this some thought and discuss it with your partner.

Tidy up the paperwork

Like most people, you might have accumulated a file, files or a drawer full of statements and correspondence from financial product providers and it just keeps getting bigger.  Most of this can probably be shredded or scanned if you think you will need access to it again.

Sorting out your paperwork also provides an opportunity to list, by hand or in a spreadsheet, everything you own and owe.  Again, a good financial planning firm will do this for you, but it makes your life and those of your advisers easier if your financial information and policies are summarised in one place.

The process of sorting out all your paperwork and collating your assets and policies can be very rewarding and you might find a policy or asset you’ve forgotten about.

Contact a financial planner or other adviser

Agree to make a New Year’s resolution to make initial contact with a solicitor, tax adviser or financial planner, so that you can deal with any tax-related matters you need help with, update your wills or start the process to create a financial plan.

Whatever you manage to do over Christmas, I hope you have a relaxing time and get to recharge your batteries after what has been a year we will never forget.  Here’s to a great 2021 … let’s face it, it can’t be much worse than 2020!

Seasons Greetings

Charles