With the rugby world cup upon us, my thoughts strayed to Sir Clive Woodwood’s 2003 winning team.
If I recall correctly, his approach was very specific: Focus on every detail – training, coaching, diet, etc. Sir Clive believed small incremental gains in each area could amount to significant benefits and you can’t argue with the results! With a potential knighthood in mind, I’m applying the same concept to financial advice!
It is easy to overlook small benefits or resign them to something you’ll do later, but that means, ultimately, you miss out. When taken together, the accumulation of government allowances can add up to something really worthwhile that has a positive impact on your financial wellbeing.
Making the most of marriage
Take the marriage allowance, for example. If you don’t have sufficient income to use all of your personal tax allowance (currently £12,500), you can transfer up to 10% to your spouse. This means an annual saving of £250 while ever your circumstances stay the same. Theoretically, if nothing changes throughout your retired life together, the saving could be £7,500 over 30 years.
And the news gets better. If you haven’t claimed marriage allowance yet, it can be backdated to April 2015. I’m happy to say I recently helped a client do just that and he received a refund from HMRC in less than a week of approximately £1,000.
Unfortunately, it is quite common for those who worked hard, earned a good living and paid higher rate tax not to fall under the self-assessment regime. Typically, you will have been employed and all income and benefits will have been accounted for under PAYE. This means the higher rate tax relief you should have received against pension contributions may have been overlooked.
Again, it is not too late – it is possible to claim relief against the previous three tax years and I’m delighted to say we recently helped a client recover more than £2,000 that he would otherwise have foregone.
Topping up National Insurance
Making sure you maximise your state pension is the greatest benefit you can receive. You can do so by obtaining a pension forecast that will highlight how many years of National Insurance contributions you have, identify any gaps and determine how they might be filled.
Since the introduction of the new flat rate state pension in April 2016, it is vital you check your forecast, as the number of years’ National Insurance contributions required to qualify for a full pension increased from 30 to 35.
The good news is these gaps can be filled relatively inexpensively. For example, £780 in the tax year 2018/19 buys you an additional £4.82 per week, index linked for life.
If you have given up work to care for a grandchild, you can claim a free National Insurance credit each year, worth approximately £780, tax free, as long as your son or daughter is receiving child benefit.
Carers Credit is also available if you look after a loved one. The result is the same as it is for grandparents, free National Insurance credits worth £780 a year.
At Belmayne, we believe the little things matters and all of the above is part of our standard financial planning service. If you’d like more information about claiming government allowances, simply contact me on (01246) 298181 or email: firstname.lastname@example.org