Your 2025 financial to-do list: 10 things you MUST do this year


Updated on 06 January 2025 | 0 Comments

The New Year gives us an opportunity to turn over a new leaf. Why not start 2025 with a new financial action plan?

Feeling like you could be doing more with your money than you have been? Wondering where you could be saving or making your cash work harder for you? 

Here are 10 things you should plan to do in 2025 to make the most of your finances. 

Take advantage of your ISA allowance

Nobody wants to pay interest on their nest egg but with most savings accounts we do.

However, in the 2024/2025 tax year each of us has a £20,000 ISA allowance – this means that you can save £20,000 into your ISA without paying tax on it, so make sure you make the most of it. 

You can spread this allowance across any allowed combination of ISAs, such as a Cash ISA, a Stocks and Shares ISA or an Innovative Finance ISA, but the total you pay in over the year mustn’t exceed £20,000. 

Up to £4,000 can be paid into a Lifetime ISA – this is separate from the allowance for Cash and Stocks and Shares ISAs. 

There is also a separate £9,000 tax-free allowance for Junior ISAs this tax year. 

The current tax year runs from 6th April 2024 to 5th April 2025. 

Top up your State Pension if needed

If you missed out a few years of paying your ‘stamp’ to qualify for the State Pension - perhaps if you took time out to have children - there’s currently a great opportunity available to top it up. 

Indeed, pension savers could boost their retirement pot by up to £65,000 by making voluntary National Insurance contributions to top-up as many as 10 missing years from their National Insurance record. 

Usually, the maximum buy-back available is up to six years, but due to changes to the State Pension system the Government is offering this rare chance for pension savers. 

The deadline was initially April 2023 but, due to a flood of applications, the Department of Work and Pensions extended it to April 2025. 

Don’t miss out – you can find out more about the benefits and what to do in our handy guide here

Make the most of your Self Assessment filing 

Nobody enjoys filling in their Self-Assessment tax form. But if you have to file one, make the most of the hassle involved by maximising the benefits of doing so. 

Make sure to claim for everything you are entitled to, such as mileage, a portion of your electricity and broadband bills and other expenses if you are self-employed. 

Also, if you work from home part of the week as an employee, you may be able to claim back tax relief. 

Bear in mind that you can only do so if you have to work from home because as part of your job you have to live a long distance from the office, or if your company doesn’t have an office. 

You can claim back tax relief at your Income Tax band, based on spending of £6 a week.Basic Rate taxpayers get £1.20 a week (£62.40 a year), Higher Rate taxpayers £2.40 a week (or £124.80 a year), while Additional Rate taxpayers get £2.70 per week (or £140.40 per year).

What’s more, if you are a high earner, be sure to claim for Additional Rate tax relief on your pension contributions. If you qualify for Additional Rate tax relief at 45%, you will have to file a Self Assessment tax form to claim for it. 

Pay into a pension

Incidentally, if you are not already paying into a pension, make sure to open one as soon as you can, especially if you have a workplace scheme available.  

If your employer matches the payments, you could be missing out on what is essentially free money. And the longer the money is invested for, the longer it will have to grow and generate sufficient income for your retirement. 

What’s more, you receive tax relief on your contributions, meaning the Government will top up your payments to the tune of 20% for Basic Rate taxpayers, 40% for Higher Rate taxpayers and 45% for Additional Rate taxpayers. 

Save for a rainy day

It’s important to save into a pension scheme for your retirement, but you can’t access that money in an emergency. 

So, if you can, make a commitment to squirrel away money each month into an easy access savings account.

This will give you a source of cash you can get to if times are difficult or if you need money to pay for a sudden repair job or broken appliance. 

Set up a regular standing order and you’ll hardly notice the money going out, but it will soon accumulate and prove useful when times are tough. 

Pay off credit cards and loans

That said, if you have existing outstanding loan or credit card debt, make it a priority to pay this off first.

That’s because the interest you will be paying on it is likely to be at a much higher rate than any you can earn on your savings, so your spare cash is best spent paying down your debts. 

For example, you could be paying 10% interest on a personal loan but only getting 1% on your savings, making paying off your debts first a no-brainer. 

Overpay your mortgage if you can

It’s not possible for all of us, especially given the continuing squeeze on living costs, but if you’re a homeowner and can afford it, consider overpaying your mortgage. 

Doing so by even just a couple of hundred pounds a month can make a big difference, increasing the equity you own in your property and reducing how long it will take to pay off the mortgage. 

Over the long run, overpaying can shave thousands of pounds off your mortgage and save you years of repayments.  

Most lenders give you an allowance for how much you can overpay each year – be sure not to go over this bracket or you may be charged a penalty. 

Are you getting the best out of your bank account?

Lenders can be lazy with loyal customers and often offer best banking deals to new ones, forgetting those who have been with them year in and year out. 

Check your interest rates and whether you are getting value for money. Could you switch to a new account with another lender and get a better deal, plus monthly cashback as well as a £150 to £175 cash bonus? 

Take a look at our article on the best buy bank accounts to see what’s on offer. 

Review your utilities and insurance providers

Not changed your utilities services for a while?  Check on a comparison website such as Uswitch to see if you are getting the best value for money on things such as your electricity and gas, broadband, landline (if you still have one) and mobile phone services. 

As long as you’re not tied into a contract for a certain period of time, you could switch and save up to £163 a year for broadband services, according to Uswitch, and up to £352 a year by switching to a SIM-only deal on your mobile phone. 

When your insurance policies come up for renewal, look around for the best deal. You could save up to £301 a year, for example, by not auto-renewing your car insurance, according to the comparison website MoneySuperMarket.

 

Cut out overspending

Last but not least, check you aten't still paying out for things you don’t need or want, like magazine and TV streaming subscriptions, club or website memberships, charity donations or overpaying for insurance. 

Consider if you are overspending on your food shop. See if you can switch to a cheaper supermarket, buy own brand goods or cut down on what you’re ordering to save cash.

Plus, if you go into work, making your own lunch or bringing in your own coffee could save you hundreds of pounds a year. 

We can't always find new ways to get more money, but we can do our best to make sure our money is working the hardest it can for ourselves and our families in 2025.  

Comments


Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © lovemoney.com All rights reserved.

 

loveMONEY.com Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FCA) with Firm Reference Number (FRN): 479153.

loveMONEY.com is a company registered in England & Wales (Company Number: 7406028) with its registered address at First Floor Ridgeland House, 15 Carfax, Horsham, West Sussex, RH12 1DY, United Kingdom. loveMONEY.com Limited operates under the trading name of loveMONEY.com Financial Services Limited. We operate as a credit broker for consumer credit and do not lend directly. Our company maintains relationships with various affiliates and lenders, which we may promote within our editorial content in emails and on featured partner pages through affiliate links. Please note, that we may receive commission payments from some of the product and service providers featured on our website. In line with Consumer Duty regulations, we assess our partners to ensure they offer fair value, are transparent, and cater to the needs of all customers, including vulnerable groups. We continuously review our practices to ensure compliance with these standards. While we make every effort to ensure the accuracy and currency of our editorial content, users should independently verify information with their chosen product or service provider. This can be done by reviewing the product landing page information and the terms and conditions associated with the product. If you are uncertain whether a product is suitable, we strongly recommend seeking advice from a regulated independent financial advisor before applying for the products.