It’s been five years since the pandemic turned the world upside down. The experience provided lessons in many aspects of life, not least its potential fragility. During the lockdowns, many people became suddenly aware that they had no will or, if they did, it was woefully out of date. The realisation came at a time when making an appointment with a solicitor or will-writer was nearly impossible because of the restrictions imposed on movement and meeting. Half a decade later, were a new pandemic to arrive, such as a mutant bird flu, are you sure that your will is up to date? If you cannot answer yes, then you know, for your family’s sake, what you need to do. However, whether or not you have made sure your will is up to date, it is best thought of as a starting point rather than the end of the matter. To be able to follow your will’s instructions, for all but the smallest estates, the people you have chosen as your executors must first obtain a grant of probate (confirmation in Scotland). In turn, this will require them to calculate the net value of your estate. This is often the point at which executors begin to realise the task they have taken on. Accessing records Imagine that your estate was the one to be valued: how easy would it be for your executors to prepare a list of what you owned and what you owed? Initially, they might ask a surviving spouse or partner – if one exists – for details. Unfortunately, that can sometimes produce a response such as, “Sorry, I always left money matters to him/her”. What your executors would hope to find is a reasonably up-to-date list of your investments, bank accounts, pensions and other assets, including any borrowing (for example: credit cards, personal loans and mortgages). Ideally, each item on the list would have the relevant account/customer numbers and contact details. If you haven’t already set up such a document – on paper or an accessible digital form – your executors are not the only ones facing a struggle. You may be, too, trying to manage your finances, especially as you get older. Taking the time to organise your affairs now, while you can, could be one of your greatest gifts to those you will leave behind. The Financial Conduct Authority does not regulate wills and will writing.

In the first month of 2025, online trading platforms such as eBay, Airbnb and Vinted had to provide HMRC with a report on their users’ sales in 2024. This was the first time such reporting had been due, although the origins of the requirement date back to 2020 when the Organisation for Economic Co-operation and Development (OECD) published model rules targeted at tax avoidance via digital platforms. When it first emerged that HMRC would be sent this information there was a flurry of inaccurate media coverage with scare-mongering headlines such as ‘eBayers to be taxed’. In response, HMRC issued a press release before Christmas with the straightforward headline, ‘No tax changes for online sellers’. While ‘no change’ is factually correct, it may feel like a change for those questioned by HMRC on their selling activities. With this in mind, it is important to understand the rules. HMRC will only receive a report from a platform if, in 2024, the individual: • Had sales of at least €2,000 (about £1,700); or • Made at least 30 sales. The reports have nothing directly to do with personal tax liability, although they will encourage HMRC to raise queries about whether one exists. If all you are doing is selling your unwanted items online, that is not a taxable activity. What HMRC wants to know about is people who are: • Trading, i.e. buying items for resale at a profit; or • Providing services, be that driving a van or letting out a property. These activities have always been taxable – hence HMRC’s “no change” stance. However, even if you do have trading or rental income, you will not have any tax liability if: • Your total gross trading/services profit (i.e. before deducting any expenses) is not more than £1,000 in a tax year; and/or • Your total rental income (again before expenses) is similarly no more than £1,000 in a tax year. These £1,000 annual trading and property allowances are little known and are as much about saving HMRC administrative hassle as helping their ‘customers’. As ever in tax, the finer the detail, the more useful understanding it can be. Tax treatment varies according to individual circumstances and is subject to change. The Financial Conduct Authority does not regulate tax advice.

It is the turn of the year. The health secretary of the relatively new Labour government announces a commission to review the financing for long-term care of the elderly. Can you name the year? You may not be surprised to know that there are two correct answers: 1997: in December of this year, Frank Dobson, the Health Secretary in Tony Blair’s new government, fired the starting gun for a Royal Commission report with the title "With Respect to Old Age: Long Term Care – Rights and Responsibilities." The report was published in March 1999 and its main recommendation – that the state should pay for personal care – was rejected by the government in July 2000 2025: in January of this year, Wes Streeting, the Secretary of State for Health and Social Care in Sir Kier Starmer’s government, said he would be launching an independent commission into adult social care. An interim report is due in 2026 which “will identify the critical issues facing adult social care and set out recommendations for effective reform and improvement in the medium term”. The commission’s final report which, among other elements, consider “how to best create a fair and affordable adult social care system for all” is due by 2028. Between 1997 and 2025, there were numerous other commissions, white papers, inquiries and reviews. These have mainly focused on England, as from the late 1990s social care became the responsibility of devolved governments. Nevertheless, the four countries’ long-term care funding rules all have a similar structure and rely in some part on means-testing above relatively modest thresholds. For example, in England an individual with capital of over £23,250 is responsible for the full cost of their care. England had been due to have a new care-funding scheme with a fee cap of £86,000 from October 2023. However, this was deferred until 2025 by the previous Chancellor and then abandoned by the current Chancellor last July on the grounds that the funding did not exist. Given that the next election is due by mid-2029, it seems unlikely that any reforms to care funding in England will be legislated for until the next decade. If you are concerned about how you will need to fund your or a loved one’s long-term care, early planning is the first step.

NS&I can trace its roots back to 1861, when Gladstone, then Chancellor of the Exchequer, launched the Post Office Savings Bank. NS&I’s latest quarterly results show that on 30 September 2024, it held £233.9 billion on behalf of investors. That might seem like a lot of money, but it’s a small amount considering the vast budgetary hole the current government is trying to navigate between spending and revenue. The figures that came out alongside the Autumn 2024 Budget revised the 2024/25 gap – officially called the Central Government Net Cash Requirement – to £165.1 billion. Another £139.9 billion is needed to repay existing government debt which matures in 2024/25, bringing the total to over £300 billion. In other words, the entire stock of NS&I, accumulated over 163 years, would cover the equivalent of about nine months of government financing. In terms of how much fresh cash NS&I is currently raising, its impact can be counted in days, not months. In the first six months of 2024/25, NS&I’s net inflow was £3.3 billion – four days’ worth of government financing. Currently government bonds (gilts) account for the lion’s share (a projected £296.9 billion in 2024/25) of government financing. That makes NS&I a minnow, picking up the public’s retail pennies rather than institutions’ warehoused pounds. Arguably, if NS&I did not exist, it would not be invented today. But it does exist, and the government would not want to see the NS&I’s £230 billion+ disappear, so it will continue to survive. In recent months, NS&I has been cutting rates on many of its products, from Premium Bonds (prize rate now 4.0% against 4.4% in November 2024) through Income Bonds (3.44% now against 3.93% in mid-November 2024) to two-year Guaranteed Growth Bonds (3.60% now against 4.60% in early September 2024). NS&I rarely tops the rate tables, and recent cuts have left it languishing at the point where better returns can be found elsewhere. If you hold NS&I investments, it is worth checking whether they still are the right home for your cash. Our pick of leading current leading interest rates can be found here. Those holding larger cash amounts might also like to ask us about our Cash Management solutions.

Six steps to improve your financial efficiency and resilience in 2025

If you are approaching the end of your 5-year fixed rate mortgage and currently enjoying an interest rate of around 2%, you have probably been watching the fluctuations of interest rates with some trepidation. The November 0.25% cut from the Bank of England has not fed through to your prospective remortgage interest rate and some lenders are even going in the opposite direction of the Bank and nudging rates upwards. What’s going on? The answer is nothing unusual, despite the contrary movements. It is a common misconception that the Bank of England controls interest rates. The Bank does manage short-term interest rates by setting its Bank Rate, which is the rate it pays on the money it holds for commercial banks. By fixing a minimum fully secure return that the commercial banks can earn, the Bank of England influences what those banks can charge for lending. The key point is that the Bank of England is setting a short-term rate which can theoretically, change every six weeks, when the Bank’s Monetary Policy Committee meets to set rates. Longer term interest rates are not usually controlled by the Bank of England but set by the markets. The markets will take account of the current Bank Rate but if a fixed rate for, say, 5 years is under consideration, then the market is implicitly estimating the movement of Bank Rate over the next 60 months. As with any medium-term financial forecast, that forward-looking calculation has a wide range of factors built in. The result can be that as the short-term Bank Rate is cut in response to current economic conditions, longer term rates rise because of the markets’ views of longer-term prospects. The graph above illustrates how the Bank Rate and the yield on 5-year fixed rate government bonds have moved between mid-July and mid-November in 2024. While the Bank Rate has fallen 0.5% over the period, the yield on the five-year gilt has risen by about 0.4%. That reflects the market changing its mind about how quickly and how far the Bank will cut rates. If your mortgage is due for refinancing soon, you may find yourself hopefully watching the markets for signs of that change of mind. Your home is at risk if you do not keep up with repayments on a mortgage or other loan secured on your property.

Now that the UK has its first Labour government in 14 years, there is a certain irony that one of the policies of the last Labour government is still playing out, despite being scrapped by the Conservative/Liberal Democrat coalition government in 2010. CTFs were launched in January 2005. Over the next six years, the government paid £2 billion into accounts for 6.3 million children born between 1 September 2002 and 2 January 2011. In practice, most children’s CTF received a single payment of around £250, which was doubled for low-income families. A second similar payment was made once the child reached age 7, as long as this occurred before 3 January 2011. The government made these payments through a voucher sent to the child’s parent or guardian. The method was not a great success. As a result, HMRC opened 28% of all CTF accounts by default on behalf of children whose parents/guardians had left the vouchers unused for 12 months. However, the lack of interest by parents/guardians signalled the future problems that would emerge when CTFs began to mature as children reached age 18. Jump forward to 5 April 2024, when recently published HMRC statistics revealed that 671,000 CTFs had reached maturity but were unclaimed. More than half were for adults of 19 or older. The average value of the unclaimed plans was a little over £2,000. However, there were 25,000 plans with a value of at least £10,000, almost certainly the result of additional contributions by parents or relations. If you, your children or grandchildren want to track a ‘lost’ CTF, then HMRC has a web tool that can supply the name of the CTF provider. Fortunately, a rule change several years ago means that the UK tax freedom enjoyed by CTFs continues beyond age 18. However, it may be better to transfer the matured CTF monies into a new adult ISA, which could potentially offer lower charges and/or a wider investment choice. For the same reasons, it can be worth transferring CTFs yet to mature into a Junior ISA.

Financial Conduct Authority (FCA) publishes a review of the cash savings market following evidence of some dubious tactics at play.

Central banks around the world are beginning to cut interest rates with the European Central Bank leading the way.