Being prepared in advance for these events can help to improve your cash flow.
This year is going to see some big changes to what money you have and how much you spend. Some will need to act fast, while others should wait and see. Here are some key dates you need to mark in your diary.
As of January 2, fares will rise by 2%. That means if you commute by rail with a season ticket you’ve got until January 1 to beat the increase and buy at 2014 prices. Starting your season ticket before then can mean a big saving.
Any election year will see a raft of pledges from political parties. You can expect this year’s budget in March to have big economic policy announcements as the Government looks to attract voters. Exactly what will happen and when won’t become clear until later, but you can be sure that taxes and benefits will be hot topics.
Pension changes and ISA deadlines
The start of the month sees some of the biggest changes in how pensions work for generations. If you’re about to retire, waiting until April could offer some massive financial advantages. Over 55s will be able to take up to a quarter of their pension pot tax free, convert some or all of the rest into a guaranteed taxable income for life (an annuity), or withdraw the remaining cash in stages or as one lump sum. Tax still needs to be paid on either option, as if it were income. To help you decide, you’ll also be able to get free and impartial guidance.
Last summer, ISAs were boosted so you could get tax-free interest on savings up to £15,000 a year, rather than just under £6,000. You’ve got until April 5 to pay in up to that amount. If you have the savings, filling the year’s allowance can make a big difference. Then from April 6 you can open a new ISA—also known as a NISA—and start again.
The base rate has been at 0.5% for nearly six years now, but we could see a move towards what Bank of England governor Mark Carney calls a “new normal” of around 2.5 to 3%. When the Money Advice Service researched how interestrate rises would affect home-owners, it found 47% of people would find a rise of £150 a month hard to cover. Almost one in five would really struggle to cover any increases.
Any rise could be as gradual and as little as a quarter or half per cent each time, or there could be percentage-point increases. You’ve probably got time to find out what you can afford and make changes to your spending and saving before it becomes unmanageable. Interest rates on savings will rise too, but don’t expect significant changes for a while yet.
Nick Hill is a money expert at the Money Advice Service.