While the current financial climate makes it challenging, April 6 should always be earmarked as an important date to step back and reassess one’s finances. Maike Currie, Investment Director for Personal Finance at Fidelity International, spoke exclusively with Express.co.uk about her top new tax year resolutions for savers and investors to consider.
Take stock of any tax changes
Ms Currie explained that in July 2022, the threshold at which people start paying National Insurance (NI) is increasing to match the income tax threshold of £12,570.
However, personal allowance and higher-rate thresholds for income tax are currently frozen, with the Office for Budget Responsibility (OBR) saying that this could bring 1.3 million people into the tax system and create one million higher-rate taxpayers by 2025/26.
She continued: “Some employers allow their employees to give up some salary to spend it instead on work benefits, a process known as Salary Sacrifice.
“Perks could include dental cover, bike-to-work schemes, or pension contributions. If you think you’ll get value from such benefits, they could technically reduce your income therefore the amount of tax you pay.”
READ MORE: Attendance Allowance recipients get up to £145.60 more – how to claim
Reassess pensions
Ms Currie said: “Given recent market volatility and the ongoing squeeze on people’s savings, now is the time to ensure your money is working its hardest.
“If you’re able to keep up regular contributions to your pension, it can be a huge benefit for the future.
“Pension savers should consider how to get the most from their workplace pension, whatever your age.
“It’s well worth exploring whether your employer will offer to contribute more than the statutory minimum required under auto-enrolment (currently three percent), as even small amounts can make a big difference over time.”
DON’T MISS
She mentioned that one other consequence of the raising of the NI threshold is that some workers may no longer be earning enough to start paying NI and thereby building up qualifying years towards the state pension entitlement.
Britons are reminded that to get the full state pension they’ll need 35 years of National Insurance contributions.
If people have less than this, their pension is worked out pro-rata. They can check how many years they’ve amassed online through the government service.
Drip-feed into portfolio
With consumers facing record inflation and interest rate rises, it’s important someone ensures their portfolio is as volatility-proof as possible.
Ms Currie said: “To start the new tax year of in the strongest position, try to remain committed to investing a set amount on a regular basis across a spread of investments.
“By adopting this approach, you remove your built-in biases and assumptions automatically and dispassionately, investing more when prices are low and less when prices are high – a process known as pound cost averaging that can reduce your losses in falling markets.”
Fight back when it comes to fuel & energy bills
Ms Currie explained that elevated oil prices have pushed petrol and diesel prices to record levels, with the average price for a litre of unleaded now at 163.28p.
The Spring Statement did bring a small measure of relief, with the Chancellor announcing a five pence per litre reduction in fuel duty.
She added: “There’s not a great deal you can do to lower energy bills now, but those able to invest in renewable energy measures or energy efficiency improvements for their homes were handed some financial incentives in the Spring Statement.
“The five percent in VAT that applies on measures like solar panels, heat pumps and insulation was removed completely, plus new measures like wind and water turbines will now qualify for the discount.
“The Chancellor said this could cut the cost of installing solar panels by £1,000, and the cost of annual energy bills by £300.”
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