Financial experts are painting a gloomy picture for 2018 as many uncertainties loom over the horizon.

Market conditions are expected to be volatile so it is important to stay wise when it comes to your tax planning and investment strategy.

Here is what the experts are saying on making the most of your money.

Mike Pole who runs Pole Arnold, an independent financial adviser based in the East Midlands, offers some guidance.

Estate planning

These are really, really important points for all individuals to be aware of and if they do not act on anything else covered in this article then they must act on this.

I have seen many problems caused for family members on death when these aren't done properly.

It's bad enough to have to deal with the loss of someone and the added stress of trying to resolve the problem of not having an up-to-date will can tip people over the edge:

  • Ensure your wills are up-to-date
  • Make sure lasting powers of attorneys are in place so that, in the event of your incapacity, a trusted family member or friend can look after your financial affairs and make decisions with regards to your health
  • If you have a pension fund, ensure you have nominated who you would like to receive your pension fund in the event of your death. This is done by completing a simple nomination form with your pension provider

Credit Cards

Save money by reviewing your credit card provider and, where possible consolidate, to one with a zero rate of interest on balance transfer/new purchases.

Aim to repay the balance before the zero interest rate expires.

Make sure you're not paying any unnecessary fees on your credit cards
Make sure you're not paying any unnecessary fees on your credit cards

Holiday spending

As sterling continues to struggle against the euro and dollar, it is important to get the best exchange rate available at all times.

Take the stress out of exchanging cash (especially at the airport where rates are often the lowest) or paying unnecessarily high fees with your bank/credit card provider and consider a focused 'travellers' credit card for low fees and the best available exchange rate.

For example, the Halifax Clarity Card or the app savvy solution offered by provider 'Revolut'.

Check your tax codes

Check your P60 and tax code each year to make sure you are paying the correct amount of tax.

Contact the HMRC to query any items that do not look right on your tax calculation.

For example, if you have moved employers, it is important to check any deductions or increases made against your personal allowance are still applicable (for example, if you no longer receive private medical insurance, you may be paying too much tax).

Review your premium bonds

Premium bonds have been the 'go to' for savers for many years but what are the odds that you will achieve a better rate of annual return, compared to investing in a short-term fixed rate cash ISA?

If you are a basic rate taxpayer and have £20,000 invested in a cash ISA paying 1.3 per cent per year there is a 0 per cent chance that premium bond will beat this (based on the luck of an average person).

Keep on top of your cash and savings

With the recent interest rate increase (albeit a small one!), it is wise to review any fixed rate bonds that have matured or monies that you have sitting in low paying savings accounts. As at December 2017, Investec are offering a rate of 1.85 per cent on a one year fixed rate bond and your savings will be protected up to £85,000 (this compensation applies per person per institution you save with).

Make use of comparison websites, for example, as a guide to keep up-to-date with the wide range of savings vehicles available and the latest competitive rates.


With a little help from HRMC, you should make use of your pension annual allowances but don't forget to claim the additional 20 per cent tax relief if you are a higher rate taxpayer.

You can contribute £3,600 gross to a pension if you have no earned income and with basic rate tax relief of 20 per cent provided by HMRC this will only cost you £2,880.

For those with earned income, you (and your employer) can contribute up to 100 per cent of your salary (up to a maximum of £40,000 gross) and for very £1,000 paid to your pension it will effectively cost you £800.

For higher rate taxpayers, a £1,000 contribution will effectively only cost you £600 as 20 per cent tax relief is added by HMRC directly to the scheme and the additional 20 per cent higher rate relief can be claimed via your tax return (or by writing to the HMRC).

If you haven't been claiming higher rate relief on your pension contributions, it is possible to do this retrospectively for four tax years.

Marriage Allowance

Transfer your unused personal allowance to your tax paying spouse/civil partner: This is simple and quick to do and you can get a cheque for over £600 to pay off those January credit cards.

You are able to transfer £1,150 of your personal allowance to your spouse/civil partner if they earn more than you.

In order to be eligible you must have income of £11,500 or less and your spouse/civil partner must be a basic rate taxpayer (i.e. have an income between £11,501 and £45,000).

This will reduce their tax bill by £230 in the tax year and it is possible to backdate this 3 years and claim over £600 as a cash rebate

Balancing tax

Capital gains: Each side of a marriage or civil partnership has an annual capital gains tax allowance of £11,300 a year.

If this isn't used in the tax year it is lost. If you own shares or property in your own name and are planning to sell the asset - and it has a gain greater than £11,300 - before disposing of the asset it would be very efficient to make a tax exempt transfer of half of the asset to your spouse/civil partner.

This will then double the tax free exemption to £22,600 (assuming no other gains in the tax year).

Income tax saving: If one spouse is a higher rate tax payer and another is a basic rate or non-tax payer, it is important to review which assets (investments/cash) are held between the higher rate taxpayer and the lower rate taxpayer.

Dividend allowance: The tax free dividend allowance is reducing to £2,500 per person next tax year and it is important for both spouses/civil partners to make use of this allowance.

This can be simply be achieved by jointly holding a share/investment portfolio.