What to think about over the festive season/ 2014

Christmas, as the retailers will tell you, is just around the corner and many are starting to plan the festive season….with its associated costs.

Christmas is a time for family, and many think about what they can do for their families. With oil and associated petrol prices falling, the cost of getting around should be lower this year, and inflation is falling, seeing other increases being moderate.

As always, be careful on those credit cards, with Black Friday in late November (deals galore!) as you start your Christmas shopping, to ensure that you are not suffering with the effects of debt for the rest of 2015, especially if interest rates do rise.

But what else should you be thinking about as the year comes to a close?.......

1. Gift allowances are often considered by those that can afford to gift to their family at this time of year. The gift allowance can be helpful in gifting money away efficiently and reducing inheritance tax liabilities. You can give away £3,000 in this tax year, and if you did not give away last year’s allowance, you can go back one year, making the total gift allowance available £6,000. If you are a couple, this could mean you could give away £12,000 in total.

2. The Bank of England is now indicating that bank base rates may only increase in the 3^rd quarter of 2015, although not guaranteed. Good for those with variable rate mortgages and disappointing for those who rely on savings for income. Be ready for this increased cost if you have loans and mortgages in 2015.

3. Some relief will be available for savers over 65, who will be able to apply for Pensioner Bonds from very early January 2015. Two types of Bond should be available: 

• Fixed Rate 2.8% pa Gross Annual Equivalent Rate (AER) 1 year
• Fixed Rate 4.0% pa Gross AER 3 years (annual interest only)

Be quick, the allocation will not last long and remember to review your savings and the rates of return regularly.

4. Some of the devil may be in the detail for the above savings arrangements and more financial information will be made available from The Chancellor, George Osborne, in his Autumn Statement on 03^rd December. With an election only five or so months away, the cupboard is quite bare at this time so it will be interesting to see if he can provide any ‘giveaways’ to the public before the May 2015 elections.

5. Inflation (Consumer Prices Index/CPI) hit 1.3% pa (a slight rise from September of 1.2% pa in October). Inflation may be a good thing, because the alternatives of stagflation and deflation are worse, as our previous blog has already noted.   

6. Retirement benefits and the ways they can be accessed are likely to be the financial story of 2015. Much is changing in the pension world in April 2015. The government will be offering some support on information on the changes and some of the issues that a person drawing their pension benefits should consider. This will be called guidance, but will not be advice. So if you are thinking about re-arranging your pension funds next year and need advice, and most should, we would urge you to speak to an independent financial adviser early and plan accordingly.

7. In recent times some have found it harder to get advice on their finances because of changes in regulation.  The financial services regulator, The Financial Conduct Authority (FCA), is now encouraging alternative delivery of financial advice. The FCA published a guidance consultation paper in July 2014 focusing on retail investment advice and its future delivery. As we have seen in many other areas, digital delivery may be one solution, and there are some providers working on this proposition, with sites like www.Saidso.co.uk due to be available by the end of 2014.

Summary

2014 has been a busy year in financial services and most markets have experienced volatility from the end of the summer onwards. With the geo-political situation remaining tense in various areas, I am sure we will see more of this in 2015 and beyond.

Regulation has also had a significant impact on financial planning, particularly for companies that need to meet their pension Auto-Enrolment requirements. Many more small and medium-sized enterprises (SMEs) will reach their staging dates in 2015 and we can offer support to meet these needs.

No individual pension/ financial advice is provided during the course of this blog.

If you would like financial planning advice for your individual circumstances for 2015 then please contact the team at Chapters Financial at either our Guildford (01483 578800) or Woking (01483 330800) offices.

Keith Churchouse BA Hons FPFS
Director, Chapters Financial Limited
Chartered Financial Planner
Certified Financial Planner
ISO22222 Personal Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.