As we move into the new year, many of us choose to make resolutions. The usual ‘going to the gym’, ‘eating healthily’ and ‘having fewer takeaways’ have normally gone by the wayside already. Rather than resolutions that are made to be broken, in this article we’re bringing you four good financial habits to adopt this year.

Make tax-efficient investments

You can make tax-efficient investments throughout the year with a Stocks and Shares ISA. These will invest your money into funds, which in turn hold assets such as bonds, company shares and stocks. ISAs are a tax-free, high performing way to grow your wealth. Any investment growth or income generated from your ISA is free from both income tax and Capital Gains Tax*. This means you will keep more of your money.

Currently there is a £20,000 annual allowance for ISA investments. This can be split in any configuration between cash ISAs and Stocks and Shares ISAs. In November’s Autumn Budget, the Chancellor announced an upcoming change to ISA annual allowances. From April 2027, the amount that can be invested in cash ISAs for under 65s will be limited to £12,000. The overall annual allowance value will remain at £20,000, with the difference designated solely for investments in Stocks and Shares ISAs. Those over 65 will retain the full cash ISA allowance of £20,000 per year.

ISAs are long-term investment opportunities. Over time, the investments may grow or decline, having a knock-on effect on the value of your ISA. Over a long period, any fluctuations should smooth out. By investing in a diverse portfolio, the impact on your ISA is lessened further if one investment underperforms. The growth of another investment in the portfolio could off-set it. When investing in a Stocks and Shares ISA with Willday Wealth Management, we’ll tailor-make your investment portfolio to your needs. We’ll ensure your investments are based on your goals, and make sure your money is working hard for you.

Invest in your retirement

Whether you already have a private pension, or are planning to start one, making a habit of investing in your retirement is a wise choice.

For most people, there is an annual allowance for pension contributions of £60,000 per year. This is a limit on how much can be contributed to your pension whilst benefiting from tax relief. With a private pension, you will receive tax relief at source. This means you’ll automatically receive 20% tax relief** on any pension contributions you make. If you are a higher or additional rate tax payer, you can claim back up to 45% through your annual tax return.

Annual allowances are capped at 100% of your ‘relevant earnings’. A tapered annual allowance may apply for high earners whose ‘adjusted income’ is over £260,000. Find out more about tapered annual allowances in our previous blog post. If applicable, you can calculate your reduced allowance on the government website.

Currently, pension funds can be left to beneficiaries upon your passing, free from inheritance tax. However, from April 2027 pensions will be included in your estate value for the purpose of inheritance tax calculations. The standard rate of 40% inheritance tax will be due on the value of the estate above the nil-rate threshold, currently £325,000.

By investing in a private pension with Willday Wealth Management, you’ll have a personal investment consultant on-hand. We’ll ensure you get the most from your pension and overall investment plan.

Take control of your pension pot

In October 2012, the government introduced a workplace pension auto-enrolment scheme. If you have worked for more than one business since then, it may be the case that you have multiple pension pots. When you stop working for an employer, both employee and employer contributions to this pension cease. However the pension pot remains. It can be easy to lose track of pension pots if you don’t inform all your pension providers of name or address changes. This could result in not having access to all your funds in retirement. It may also mean you’re unable to plan your retirement effectively.

Willday Wealth Management can help you find your pensions. Simply let us know the details of your pension providers, pension value and valuation date, and we’ll do the rest. After locating the different pension pots, we’ll help you make sense of the options available to you. Should you choose to, we’ll help you consolidate your pension pots into a single pension portfolio. This may save you money on pension management fees and allow you to take advantage of additional growth through compounding.

Find out more about the benefits of pension consolidation and things to consider before consolidating in our previous blog post.

Start investing in your child’s future

Unfortunately it is a fact that there is no guarantee of financial assistance for the next generation when they become adults. It can be prudent, therefore, to build wealth on their behalf where possible. A Junior ISA is a tax-efficient method of doing this for UK residents under the age of 18. This cannot be accessed until the child turns 18. However the child will take over the management of the account from 16, so long as the Junior ISA is held in cash.

A Junior ISA can only be opened by a child’s parent or legal guardian. However anyone can pay into it once opened, for example grandparents or other relatives. There is a limit of £9,000 that may be invested in a Junior ISA account each year. This is the total amount that may be invested, no matter who makes the investment. This limit is in addition to the £20,000 annual allowance for adult ISAs.

Investment growth* in Junior ISAs is free from both income and Capital Gains Tax. As the account cannot be accessed until the child is 18, there is a significant opportunity for the funds to grow. You can find out more about Junior ISAs and building wealth for the next generation in our earlier blog post.

Get in touch with us today

Setting up good financial habits at the start of the year means you can take advantage of tax-free efficient savings and investments before the end of the financial year. Allowances re-set each April, at the start of the new financial year. So you can use your full allowance before April, and take advantage of a fresh allowance from then.

Call us on 0116 222 0119 or email hi@willdaywm.co.uk to get started with good financial habits for the new year. Our experienced and knowledgeable team are on-hand to ensure you understand the options available to you. We’ll evaluate your individual financial circumstances and advise on how to ensure your invested money is working in the most efficient way for you.

* With investing, your capital is at risk and you may get less than what you invested.

** You may be entitled to more or less than this amount, subject to your tax status.