Making The Most Of Your Money

Finance journalist Terri Doyle brings you the latest money news, plus hints and tips on how to make the most of what you’ve got.

Finance journalist Terri Doyle brings you the latest money news, plus hints and tips on how to make the most of what you’ve got.

Passing on your pension 

Since April, it’s been possible to leave some or all of your pension pot to loved ones without them losing any of the tax advantages. If you die before the age of 75, your beneficiaries will pay no tax on any pension savings left to them. On your 75th birthday, your pension assets become taxable, but only at the beneficiaries’ income tax level.

To put things in place, first check with your provider that your plan allows you to pass on your savings in a tax-efficient way. (Some older schemes may not allow beneficiaries to inherit the fund as a drawdown account.) Upgrading to a more modern pension may be an option, but be aware that you may have to give up valuable guarantees that sometimes apply to older-style arrangements. Give your pension provider details of your nominated beneficiary and, if there’s more than one, the share of your savings you’d like them to receive.

Inheritance tax breaks  

The latest Budget contained great news for 94 per cent of all families… they will no longer have to pay Inheritance Tax. The Chancellor, George Osborne, confirmed that, from April 2017, there will be a new ‘family home allowance’ – a nil-rate band of up to £175,000 per estate when a main residence is passed to direct descendants. This will be added to the existing £325,000 Inheritance Tax threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21. Anyone downsizing to
a smaller property will be eligible for an Inheritance Tax ‘credit’, providing the bulk of their estate is left to direct descendants.

Back to business

Pensioners mean business, according to research from AXA Wealth. More than half a million over-55s are considering setting up their own companies, taking advantage of recent pension changes that give them earlier access to a lump sum – or pledging money on crowd-funding projects, where someone with a business idea can ask for financial backing in return for rewards. Phil Geraghty, managing director of Crowdfunder, says, ‘It’s great to see older generations getting behind fantastic ideas and helping to turn them into reality.’

Thumbs Up

The EU has decreed that, from April 2016, mobile phone operators will be able to add only 3p a minute to calls, 1p per SMS and 3p per MB of data. And from June 2017, EU travellers will pay the same prices as at home.

Thumbs Down

After 59 years, Premium Bonds are no longer available from post offices. They’re now available only from the NS&I website at nsandi.com/premium-bonds, by phone on 0500 500 000, or by post at NS&I, Glasgow G58 1SB.

Happy travels

If you’re heading to Europe for a break, then it’s important to have a European Health Insurance Card (EHIC). The free card enables you to access state-provided healthcare at a reduced cost – or sometimes for free – and will cover your treatment until you return to the UK. It also covers treatment of pre-existing medical conditions. However, it’s not an alternative to travel insurance, so, for instance, if you need to be flown back to the UK, the EHIC will not cover the cost.

If you’re unfortunate enough to find yourself in an emergency during your trip, you should dial 112. This emergency number is valid in all EU/EEA member states, is free of charge, and can be used to reach emergency services such as ambulance or police from any telephone or mobile phone.

To apply for or to renew a card via the official EHIC online application form, and to find out which countries it covers, go to www.ehic.org.uk. If you find yourself on a website that makes a charge for the card, check the website address again, as the EHIC is free.

Nifty thrifty…household bills

It’s infuriating but true: staying loyal to a provider – energy, broadband or phone – is likely to cost you more. To stay ahead of the game, look at what other suppliers are offering. The average household spends about £1,200 on energy each year, yet the Competition and Markets Authority’s recent investigation into the UK energy market found that 70 per cent of us are currently on the standard, more expensive variable rate, while 34 per cent of us have never considered switching. This means a dual-fuel customer could save an average of £160 a year by switching to a better deal.

Ofcom has made it easier for customers to switch their broadband provider. The difference in price between the cheapest and most expensive deals on the market right now is £120 per year, so check out those price comparison sites today.

You can often get a better deal on your landline if you use the same company for your broadband. Also, if you make lots of calls to friends or family abroad, consider using an override provider. These companies offer low prices for individual calls, and all you have to do is dial a unique code before calling your number. Visit moneysavingexpert.com for a comprehensive guide.

The good news is that average home insurance premiums have fallen by over 25 per cent in five years. If you’ve never switched, or you renew your existing policy automatically each year, you should be able to make savings, so start shopping around.

Paying monthly for your car insurance will add an average of £62 a year to your policy, according to research by moneysupermarket.com. If you can afford to pay upfront annually, do. 41% of scams reported to Citizens Advice come from cold callS, making it the most common method of being conned.