We Brits approach 2019 with a sense of dread, waiting with bated breath to find out how (and if) the UK leaves the European Union on 29 March.
There’s no doubt that Brexit will affect various corners of our finances, but perhaps the real game-changer for our money will be the ongoing push to make parts of the financial system fit for a digital age.
Let’s look at what’s in store in 2019.
One of the biggest shake-ups of 2019 from a personal finance perspective will be the launch of the long-awaited pensions dashboard.
Despite speculation over the summer that the entire project would be ditched altogether, the government unveiled proposals earlier this month which confirmed that the pensions dashboard was going ahead.
There are plenty of positives for savers, including the simplification of a complex and clunky system. It will also mean that you can finally see information from multiple pension schemes in one place online, reducing the likelihood of you “losing” a pension.
By giving savers an overall picture of their pension pot, the dashboard could incentivise everyone to save more for retirement.
From April next year, minimum auto-enrolment contribution levels rise to eight per cent (of which employers pay three per cent). This is up from the current level of five per cent (of which employers pay two per cent).
In its brief four-year history, auto-enrolment has already proved hugely successful, encouraging millions of Brits to save for retirement.
However, with staff contributions rising to five per cent from the current three per cent, many workers will probably feel the pinch, particularly while salaries remain stagnant.
The worry is that the contribution increase will prompt people to opt out of their workplace pension scheme. Remember, though, that opting out means that you miss out on pension tax breaks, which apply to your employer’s contribution, as well as your own.
There have also been talks to extend auto-enrolment to the self-employed, with the government publishing a report yesterday outlining how this would work in practice. However, the recommendations proved disappointing, and were widely criticised by the pensions industry.
So if you’re self-employed, you might have to wait a bit longer for good news on the pension front.
Next year marks some changes to the amount you earn before tax, with the personal allowance threshold rising to £12,500 in April, up from the current £11,850. This amounts to an extra £130 each year (certainly better than a poke in the eye with a sharp stick).
It’s even better news for those on higher tax bands, with the government raising the 40 per cent tax threshold from the current £46,350 limit to those earning more than £50,000 a year.
The government has also taken kindly to pension millionaires, and is set to raise the lifetime allowance next year to £1,055,000, up from the current £1,030,000.
Death tax overhaul
There are some major changes afoot to how beneficiaries of estates are taxed when a loved one dies. The government has recognised that the hugely unpopular inheritance tax (IHT) is overdue a major overhaul, and has now proposed that the IHT service gets a much-needed digital makeover, streamlining the form-filling process, and improving communication with the tax office.
The second set of recommendations is due to be published in the spring, which will give us a clue as to how the government plans to change some of the technical aspects of IHT. Admittedly, we might not see any changes implemented next year, but 2019 marks the start of a radical shake-up that will come as a relief to taxpayers.
And at some point down the line, you will no longer have to navigate through a complex web of rules while you are coming to the terms with the death of someone you love.
Probate fee structure
While improvements to IHT are welcome, many families are unhappy about the upcoming changes to probate fees. You pay a fee when applying for a document known as a “grant of probate”, which gives you legal access to someone’s money, property, and possessions when they pass away.
At the moment, there is a flat fee of £215. But in April next year, the government is introducing a sliding scale structure, where you can be charged up to £6,000 depending on the value of the estate you are inheriting.
For a lot of households, this is a massive jump in cost, and means that people will have to figure out the logistics of paying this sum of money upfront.
Energy price caps
Some households will benefit from a cut to their energy bills when the regulator imposes its price cap on 1 January.
Once the cap is in place, Ofgem estimates that an average dual fuel customer could save £1,137 a year. This change also means that suppliers will have to cut the price of their default tariffs, including standard variable rates.
However, there is a caveat, because the energy regulator warns that the cap might increase in April to reflect rising wholsesale costs – so don't get too excited.
Rail fare hikes
Another big change to hit the pockets of commuters next year is the 3.1 per cent rail increase, which will affect season ticket holders – many of whom already fork out thousands of pounds each year on rail fares.
The hike comes into force on 2 January – so happy New Year one and all.
Of course, these are just some of the planned changes that could hit your finances, and don’t account for the multitude of other shifts that will indirectly affect your wealth.
With so much hanging in the balance with Brexit, it’s likely that house prices, interest rates, and the value of sterling will alter dramatically depending on the outcome.
But when it comes to your finances, try and focus on what you can control, rather than what is out of your hands.