Your 10-point lockdown financial checklist

Over the last few weeks, you may have found yourself with more time to tackle those little admin jobs that you have been putting off for months.

To help you, we’ve put together this handy ten-point financial checklist of things you should consider doing. From finally sorting your will to applying for government coronavirus support, here are ten things to get on with now.

1. Review your expenditure

With shops, pubs, theatres, cinemas and restaurants closed, it’s likely that your spending patterns have changed radically in the last couple of months.

So, take some time to go through your expenditure and establish exactly what you do (and don’t need) to spend your money on. Perhaps it’s time to finally cancel that gym membership, or to increase the amount you’re paying into your regular savings.

Getting your affairs in order now can put you in a much stronger financial position when the lockdown is eased.

2. Sort out your old pensions

Can you say with any certainty what your existing pension arrangements are? If you’ve worked for several employers, perhaps for short periods of time, you could have numerous pensions which could all make a contribution to achieving your financial goals in retirement.

The Association of British Insurers (ABI) estimates that more than 1.6 million pension pots worth £19.4 billion are “lost” – the equivalent of £13,000 per plan.

Now is the time to get out your paperwork and track down all your existing pensions. You could be surprised by what you find!

If you suspect that you have an old pension from a previous job, you can now use the government’s free Pension Tracing Service to track it down.

3. Donate to charity

The coronavirus pandemic has hit charities hard, with the National Council for Voluntary Organisations (NCVO) warning that losses for the sector ‘could be in the region of £4 billion’ during the crisis.

If you have been supporting fundraising efforts during lockdown, and you’re a UK taxpayer, you can normally elect to apply Gift Aid to your contributions. By doing so, the charity you are donating to receives an extra 25% at no cost to you.

If you pay higher or additional rate income tax, you can claim the difference between the rate you pay and the basic rate on your gross donation (the donation amount after Gift Aid is applied). So, remember to retain details of all the donations you make so that you can apply for the additional relief when you complete your Self-Assessment tax return.

4. Arrange your protection

Swiss Re say that the protection gap — the difference between the level of cover currently held by people in the UK and the amount they would need to be fully covered — currently sits at more than £2 trillion.

This means that millions of people in the UK would be left financially vulnerable should they, or their spouse, pass away prematurely or suffer an illness or injury that would affect their earning potential.

The Financial Conduct Authority’s Financial Lives study found that two-thirds (65%) of UK adults have no life insurance or other protection cover. Only around a quarter (28%) of adults have life insurance while just one in ten have critical illness cover.

If you haven’t reviewed your protection recently, take this time to look at your cover.

5. Write your will

A recent Remember a Charity survey found that 68% of UK adults haven’t made a will and that 47% of over-55s have failed to arrange one.

If you’ve never got around to making a will, it could mean that your assets, property and even dependent children could be left to a person not of your choosing.

If you already have a will, this might also be a good time to review it in case it needs updating to reflect changes in your circumstances. This might include marriage, divorce or new children or grandchildren.

6. Make gifts

In this unprecedented economic period, you may have decided to provide financial support to a friend or family member. If you are considering this, remember that any capital gift is normally considered a Potentially Exempt Transfer (PET) for Inheritance Tax (IHT) purposes.

If you were to die within seven years of making such a gift, it would form part of your estate for IHT purposes unless the gift qualifies for an exemption.  

You can use your annual IHT exemption to make an outright gift of £3,000. This gift is immediately taken out of your estate for IHT purposes. You can also use any unused allowance from a previous tax year.

If you have surplus disposable income, you could consider making gifts out of income. These gifts can also be exempt from IHT as long as the gifts:

7. Establish your Power of Attorney

As we have seen over recent weeks, illness or accidents can happen at any time. So, it’s important that you put measures in place to ensure that you have a trusted person to make decisions on your behalf if you’re not able to.

A Lasting Power of Attorney (LPA) is a legal document that can do just this. It could be for a short period, for example, as a result of spending time in hospital, or for the long term due to mental incapacity.

The two main types of LPA are:

You can appoint one or more attorneys to help you make the decisions on the above – they must be over the age of 18 and have the mental capacity to make their own decisions.

8. Get a State Pension forecast

Knowing exactly how much pension income you will receive can help you to carefully plan your retirement.

Since 2016, it has been easier to establish what State Pension you are entitled to. You’ll qualify for the full State Pension if you have 35 ‘qualifying years’ of National Insurance contributions – where you have been in full-time employment, or where you received National Insurance credits because you were receiving Child Benefit.

You can check your State Pension entitlement at the government website and find out when it will become payable.

9. Create an ICE document

An ICE (In Case of Emergency) document lets your loved ones know:

Now is a good time to put all the important information into one document to make it easy for your family to deal with your affairs if something were to happen to you. 

10. Apply for government support schemes

In the last couple of months, the government has announced a range of measures to support individuals and businesses during the coronavirus pandemic.

It’s worth spending some time now to establish whether you and your business is eligible for any support. This might include:

Get in touch

If you’d like help with any items on our essential financial checklist, please get in touch.  Email or call (0161) 8080200.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change. The Financial Conduct Authority does not regulate Will Writing or Tax Advice.

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