How to reduce your outgoings and invest wisely

We have all had a turbulent couple of years to say the least, due partly to the pandemic and the fear and uncertainty it caused.However, one of the surprising outcomes is that with working from home and not having the expense of the daily commute, fewer of us taking a holiday abroad and not spending as much eating out, the cash balances of our bank accounts and savings accounts have increased.With rising inflation, very low interest rates on bank and building society accounts andincreasing gas and electricity costs, you would be forgiven for thinking that the money saved over the past couple of years will soon be spent.However, there are ways to potentially help reduce your monthly outgoings both for yourself and younger generations of family members.
By Nick Lawson
Published 8th May 2023, 05:00 BST

Insurance: Home and contents insurance and other insurances such as motor insurance are usually renewed on an annual basis, and it really does pay to shop around for the best deal.

There are online comparison websites which can help you do this and if you have been with the same policy provider for a number of years you could be in for a pleasant surprise with the premiums quoted.

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Inheritance Tax: One of the questions I get asked about on a very regular basis is ‘I really want to help my children who have a mortgage and young family. However, I am concerned that if I give them any money, they will have to pay income tax on this amount.’

Nick LawsonNick Lawson
Nick Lawson

This is not the case at all and therefore not a barrier if you want to help this way.

The tax which may be of a concern is the potential inheritance tax consequences of you making the gift of monies to your children.

If your Estate is within the inheritance tax nil rate bands, which could be up to £1million for married couples or civil partnerships, there would be no inheritance tax consequences for making this gift but just ensure that you make a note of the date and amount of the gift and keep this record with your safe papers.

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If your Estate is valued over £1million you can also make annual gifts of up to £3,000 and this amount is immediately outside of your Estate for inheritance tax.

This amount is specific to the individual making the gift and the allowance can be carried forward from the previoustax year if it has not been used to make a total of £6,000, which could potentially be gifted. Again, be sure to make a note of the date and amount of the gift as mentioned before.

Another way you can gift money and for these monies to be immediately outside of your Estate is to make these gifts from excess income.

The amount of these gifts should not reduce your current standing of living and an accountant will be able to confirm that this is the case on an annual basis and sign it off so there is a clear record.

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If you want to gift moneys to help younger family members, but are unsure about what to do, we urge you take professional financial advice which will help guide and assist you with these decisions.Nick Lawson is a fully qualified investment professional with over 20 years’ experience, who is committed to the provision of holistic, independent financial advice services.

*Nick Lawson is Director, HGH Wealth Management Limited, York. Tel: 01904 655202, email: [email protected]

Website: www.hghwealth.co.uk.

Related topics:Insurance