Annie Shaw: How to save thousands in the year ahead

Annie Shaw / 30 December 2016

Start by giving your finances a good spring clean…



Organise bill payments

Pay your bills – including tax – on time. 

Although less than a third of us are still writing cheques, research shows that some people are wasting as much as £240 a year by not using direct debit. This will also ensure you pay bills on time, avoiding penalties. 

Failing to file your tax return by the deadline of Jan 31, 2017 could cost you £100 plus interest on tax owed.

Switch utilities, bank, phone, tv

The average customer who has never switched could save as much as £300 by shopping around for a cheaper energy deal, according to the energy watchdog Ofgem, but 45% of us don’t recall doing so. It takes only five minutes! Even if you end up staying with the same supplier, you might still be able to find a better tariff. Visit Ofgem’s goenergyshopping.co.uk.

Whether you should switch bank will depend on the service you need and the incentives on offer. A recent report by the Competitions and Markets Authority found those who never use an overdraft will on average gain between £89 and £115 a year by switching bank. Gains come from cash bonuses, interest on account balances and even cashback on bills.

According to Which?, seven out of ten people could save £159 a year by switching to a better mobile phone contract. Shop around online or haggle with your existing provider for a better deal.

Consumers over 55 are getting the worst value for money from their TV subscriptions. Despite paying an average of £41 a month, they watch less than a quarter (23%) of the channels available to them, paying around £380 a year for channels they never use.

In every case, make sure you don’t incur a penalty for ending an existing contract early.

How to get out of a broadband contract early

Be sure of your insurance

Check that your home, car and travel insurance meet your needs. A change in lifestyle – such as no longer leaving your house empty during the day because you have stopped work, or a person under 25 no longer driving your car – may entitle you to a lower premium.

Shop smart

Switch to budget supermarkets, such as Lidl or Aldi, and shop smart in the big name supermarkets too, by stocking up on special offers, buying ‘own label’ and checking the reduced-items shelf.

The Money Advice Service reckons an average family could save £56.03 per week by buying cheaper comparable items. That’s £2,913.56 a year.

Use voucher code websites and cashback sites such as Quidco and TopCashback to slash costs.

Eight ways to reduce your food spend

Organise your savings

Keep an eye on what rate you are getting on all your savings accounts and be prepared to move them if the rate drops. Mark in your diary the maturity dates of any fixed-rate accounts. Use interest-bearing current accounts instead of savings accounts if you’re eligible: TSB’s Classic Plus account pays 3% on balances held up to £1,500, giving you £45 a year compared with zero on many accounts.

Open an ISA at the beginning of the tax year – that way you get the advantage of tax-free growth for nearly a whole year. There’s no need to worry about having access to cash, as the new rules allow you to withdraw money and pay it back into your ISA in the same tax year, so you don’t forfeit your allowance.

Make the most of your pension

If you are still working, top up your pension sooner rather than later and certainly before the end of the tax year, to make the most of tax breaks that could potentially be withdrawn or reduced in the Budget. A 40% taxpayer could save an extra £400 by paying £1,000 into their pension plan.

If you are already drawing an income from your investments, check and possibly recalibrate your drawdown to ensure you are not taking too much and risking running out of cash. Ensure your investments are rebalanced too, so that they not only continue to perform but also reflect your attitude to risk.

Boost your state pension if you can. Consider making voluntary national insurance contributions to fill gaps or top up your entitlement if your pension has been reduced because you were ‘contracted out’ of the old state earnings-related pension.

Those who reached state pension age before April 2016 might also consider making special Class 3A voluntary contributions, which could boost your pension by as much as £25 a week. It’s complex, so talk to a good financial adviser.

Dispelling pension myths

Check your benefits entitlement

If you are struggling, make sure you are receiving all the benefits you are allowed. Did you know that if you have a national insurance shortfall, you may be able to claim credits if you look after grandchildren? See entitledto.co.uk to work out what you might receive, visit your local Citizens Advice or AgeUK branch or see our own guide at saga.co.uk/mag-claimit.

Also, you should look into the single-person council-tax discount, and reductions in travel costs through Senior Railcards and bus passes.

Keep an eye on these financial dates for the year ahead

January

File your 2015-16 tax return online and pay any tax you owe by Jan 31, saving you a possible £100 fine.

February

Review any buy-to-let properties you may have and plan accordingly as tax relief and stamp duty changes in April could affect your income.

Five things that make a good buy-to-let property

March

Spring Budget

Last chance to top up your ISA and pension in the 2016-2017 tax year. You have until April 5 to act, but leave yourself time.

Watch out for stamp prices increasing and stock up. Consider buying stamps for your Christmas cards now – though make sure these are the generic design, as any identifiable picture designs can be dated to before the price rise, and you (or the person on the receiving end) could get stung later down the line.

April

On April 6, personal allowances will rise to £11,500.

And ISA limits rise to £20,000 – open one! Consider a Stocks and Shares Investment ISA for a potentially better return.

More generous inheritance tax (IHT) nil-rate band rules apply for deaths from April 6 where a main house is included in an estate left to children or grandchildren, generally easing IHT by £100,000.

Lifetime ISA launches for under-40s. Consider funding one for a child or grandchild.

How to choose an ISA

May

Track down lost pensions and consider consolidating small pots.

June

Look around for the best holiday deals; from flights to accommodation, there are bargains to be had even at peak times.

Package holidays vs direct bookings

July

Payment on account for self-assessment at the end of the month.

Inflation figures this month are used for rail-fare increases next January.

August

Check state pension entitlement this month as NI records should have been updated by now.

September

Inflation figures this month determine some benefit increases, including the state pension from next April.

October

Paper tax returns for 2016-17 must be filed by midnight, October 31.

Self assessment tax deadlines

November

Autumn Budget

It’s Make-a-Will month, when some solicitors draw up a will free of charge in exchange for a donation to charity.

December

Start saving for Christmas – next year. Be wary of non-regulated Christmas clubs: opt for a protected savings scheme instead.

How to cut the cost of Christmas


Annie Shaw
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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.