With the Christmas holidays almost upon us, you might be looking forward to spending time with family and relaxing at home.
Yet, the festive season can also provide a valuable opportunity for getting your finances in order ahead of the new year.
So, here are six important financial tasks to check off your list before 2025 rolls around.
1. Review and adjust your budget
Setting and sticking to a budget is crucial if you want to stay in control of your finances. However, creating a budget is not a once-and-done job.
Your circumstances will likely change from time to time. For instance, your salary might increase, or you may get divorced.
There could also be external factors that affect your income and outgoings. For example, the UK Parliament has reported that consumer prices increased by over 20% between May 2021 and May 2024 due to higher levels of inflation.
So, it’s a good idea to revisit your budget periodically or if a significant change occurs, to ensure that it reflects your current financial situation, needs, and goals.
2. Make the most of your gifting allowances and exemptions
At this time of year, you’re probably busy gathering gifts to exchange with loved ones over the holidays. So, it’s an ideal time to make sure you’ve made the most of your annual Inheritance Tax (IHT) gifting exemption.
In the 2024/25 tax year, you can give away £3,000 worth of financial gifts without their value being added to your estate for IHT purposes. This is known as your “annual exemption”.
What’s more, you can carry any unused exemption forward – but only for one tax year. So, if you did not use any of your exemption in 2023/24, you could gift up to £6,000 in 2024/25 without your beneficiaries having to pay IHT on it when you pass away.
Since the government’s Autumn Budget announcement that pensions will no longer be IHT-exempt from April 2027 onwards, gifting could be an even more attractive option for passing on your wealth tax-efficiently.
Read more: Inheritance Tax – How to use gifting to preserve your loved ones’ legacy
3. Top up your ISA
An ISA offers a tax-efficient way to save and invest your wealth. You don’t pay Income Tax, Dividend Tax, or Capital Gains Tax on interest or investment returns from any money you hold in ISAs. What’s more, you usually won’t pay tax when withdrawing funds.
In the 2024/25 tax year, you can contribute up to ÂŁ20,000 across your ISAs. Before the Budget, there was speculation that the chancellor might reduce this amount, but instead, the annual ISA allowance has been frozen at ÂŁ20,000 until 5 April 2030.
It’s important to note that this annual allowance will reset at the start of the new tax year (6 April 2025). If you don’t use it, you’ll lose it.
Remember, that any savings you hold outside an ISA wrapper could incur tax on interest generated. According to IFA Magazine, almost 2.1 million people are expected to pay tax on savings in 2024, up from around 650,000 in 2021.
So, if you have any of your allowance remaining for the current tax year, topping up your ISAs over the holidays could be a useful way to bolster your savings or investments while shielding them from tax.
4. Check your State Pension entitlement
Your State Pension could provide a valuable income in retirement. Indeed, BBC News has reported that the full new State Pension is set to rise from £11,502.40 in the 2024/25 tax year to £11,976 from April 2025 under the government’s triple lock arrangement – this represents an increase of  £473.60.
If there have been any periods when you weren’t paying NICs – for example, because you took a career break to care for your family – there could be gaps in your National Insurance (NI) record.
So, if you find yourself at a loose end over the holidays, perhaps in the lull between Christmas and New Year’s Eve, it might be worth visiting the government website to check your State Pension entitlement.
If it looks like there might be a shortfall when you reach State Pension Age, you could make voluntary NICs to boost your entitlement – and there is a key deadline approaching in 2025 if you wish to do so.
Normally, you can only fill gaps in your NI record from the last six years. However, until 5 April 2025, you may be able to fill any gaps as far back as April 2006, provided you reached or will reach State Pension Age after 2016.
5. Review or write your will
Will writing might not top your list of festive activities, but the holidays could be an ideal time to check this essential financial task off your list.
Worryingly, research by Canada Life has revealed that over half of UK adults do not have a will. Yet, dying intestate – without a will – could lead to unnecessary stress and difficulties for the loved ones you leave behind.
Additionally, without a valid will in place, your intended beneficiaries could miss out on the inheritance you want to leave for them.
If you already have a will, it’s worth reviewing it over the holidays to ensure that it reflects your current wishes. It may need updating if your circumstances have changed since you wrote it, for example, if you have had children or got married.
6. Speak to your financial planner
Getting your finances in order may feel like an overwhelming task, especially if there are things you’ve been putting off for some time.
As experienced financial planners, we offer independent, impartial advice that’s tailored to your individual needs.
We can help you review your finances, make the most of tax allowances and exemptions, and create a plan for achieving your goals in 2025 and beyond.
Get in touch
If you’d like help organising your finances ahead of the new year, we’d love to hear from you.
Please get in touch by emailing info@lloydosullivan.co.uk or call 020 8941 9779 to see how we can assist you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients 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 tax planning or will writing.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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