The New Year is a great time to get your financial house in order. So, here is a list of top tips to help you make a start. 

• Know what comes in and what goes out. Check what those direct debits and standing orders are for. Do you mean to pay them? Try using our Budget Check List  to help you work out what you spend. This is a starting point for any financial planning.

Shop around for insurance and utilities

• When your household or motor insurance renews, check to see if you can get the same cover for less.
• Life cover can often be re-broked at lower cost
• Check whether you can reduce the cost of gas, electricity and phone bills

Check interest on borrowings

• Shop around for credit cards
• Don’t use unauthorised overdrafts. Better to either arrange authorised overdrafts or better still re-finance them through a personal loan and try to keep in credit going forward.

Check interest on deposits

• Although interest rates are currently low it is still worthwhile shopping around.
  
• Some so called savings accounts pay less than 0.5% gross.
  
• Banks and building societies, even when they offer better rates, generally won’t encourage you to encourage you to move accounts.
  
• It’s up to you.

Individual Savings Account (ISA) Allowance

• You can shelter up to £10,680 this tax year (£11,280 from 6^th April 2012) from income and gains.
  
• £5000 of this can be invested in a cash ISA for tax free income.

Pension Contribution Allowance

• You can contribute up to 100% of your earnings (subject to a cap of £50,000 in 2011/12) and benefit from tax relief of up to 40% on the payments.
  
• The contributions build up free of tax.

Use your IHT Allowances (gifts which immediately leave your estate)

• Gift £3000 per tax year (plus £3000 from the previous tax year if not used)
• Gift £250 per person to as many people as you want per tax year

Potentially Exempt Transfers (PETS)

• Give away as much as you like provided the gifts are outright.
  
• These will entirely leave your estate provided you survive seven years from the date of the gift.

CGT Annual Allowance

• Individuals are entitled to realise gains on the sale of investments and property of up to £10,600 in 2011/12.
• Whilst it is no longer possible to simply ‘bed and breakfast’ individual holdings the proceeds can be reinvested elsewhere. It is also possible to use this in conjunction with ISA investment, so called ‘Bed and ISA’.

Check Risk: Return Profile of investments and pensions

• Make sure that you know exactly how your investments and pensions are allocated and the level of risk to which you are exposed.
• Ensure that this corresponds with a level with which you feel comfortable and which is capable of generating the returns which are needed for you to achieve your goals.
• Rebalance Investments and pensions

Check security of final salary pensions

• If you have benefits in a final salary (defined benefit) pension scheme check how safe these are.
• They depend on the security of the employer.
• If the scheme is under-funded (as most are) and the employer is financially weak the promised benefits may be at risk.

If retiring check for improved rates using the Open Market Option

• If you are about to draw benefits from any investment linked pension such as a personal or stakeholder pension, check the rates that are available from alternative providers.
• It is also important to take your state of health into account as this could result in an enhanced rate.

Wills

• In order to ensure that your estate is distributed in accordance with your wishes make a Will.
• This is especially important if you have minor children in order to provide them with guardians and to make arrangements to look after the money that they will inherit until they grow up.

Life Policies in trust

• Place life policies in trust to ensure that the funds are paid out more rapidly and outside your estate, free of inheritance tax.

Lasting Power of Attorney

• The allow you to appoint someone you trust to look after your affairs if you are unable to do so yourself.
• They can also enable you to provide important instructions regarding medical treatment.