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Don't Limit Your 2007 Resolutions to Keeping Fit - Get Your Finances in Shape Too This New Year.
By Leonie Kerswill ~ PricewaterhouseCoopers LLP
Friday, 22nd December 2006
 
As 2007 approaches - many of us will be making our new year's resolutions. While most people's resolutions are likely to focus on such aspirations as losing weight or keeping fit, PricewaterhouseCoopers LLP offers seven top tips for 2007 for people who want to get their finances in shape too.

Leonie Kerswill, tax partner, PricewaterhouseCoopers LLP, said:

"The new year is a great opportunity to start getting finances in order. January is often a quiet month for expenditure which gives people a chance to review their financial situation. With this in mind, perhaps 2007 is the year to put a review of finances at the top of the list of resolutions."

PricewaterhouseCoopers provides its top seven financial resolutions for 2007:

1. Deposit accounts

A quick review of how much interest is being paid on deposit accounts could increase the return on investment enormously. Many people have money sitting in an old deposit account at an uncompetitive interest rate. While research suggests that many people are slow to move bank accounts, many do not realise that the varying degrees of interest can range from almost zero to base rate plus 1%.

2. Tax efficient investments

Despite there now being an array of tax efficient investment vehicles available, many people still don't invest in them. Such investments don't necessarily need to involve any risk either - deposit based Individual Savings Accounts (ISAs) and National Savings products offer a tax-free return without risk to the capital.

Also remember that most tax free allowances are available to the individual so where possible, couples should make sure each of them uses their allowance.

3. Drafting a plan

Most people fail to plan their investment portfolios properly. A plan based on a few simple objectives like when to retire and on what income is a good start. Investments can then be chosen that help to achieve these.

4. Reviewing wills

Many people write their will and then file it away where it gathers dust and, over time, may not accurately reflect their wishes. With the recent changes to trusts and inheritance tax (IHT), this year more than any it is worth reviewing that will to ensure it is accurate and remains tax effective.

Remember to nominate any death in service benefits most people nominate their spouse but it can be much more tax efficient and flexible to nominate to a discretionary trust that a spouse is a beneficiary of.

5. Investing for children

With increasing university costs and many children looking to their parents for a financial foot onto the property ladder, it is worth investing in tax efficient products like the Child's Trust Fund and Children's Bonus Bonds that will grow with them.

6. A-Day changes to pensions

A-Day (6 April 2006) may seem to have occurred some time ago, but it is important that pensions are not forgotten particularly by those who need to apply for some form of protection (enhanced or primary) to ensure their pension fund remains tax efficient. Although individuals have three years from 6 April 2006 to register for their protection, don't leave it to the last minute. According to HM Revenue & Customs (HMRC), many forms are being completed incorrectly, so it is worth submitting sooner rather than later.

7. Registering assets in a lower rate taxpayer's name

Many people still fail to use their spouse or civil partner's allowances to maximise the return on family investments. Often the higher rate taxpayer tends to hold all of the assets although their spouse is a non-taxpayer or lower rate taxpayer. By transferring some investments into the spouse or partner's name the family's overall return could improve.

www.uk.pwc.com
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