Make 2023 less taxing: the financial habits to get into now

At a glance:

• Good tax habits mean more confidence, control and peace of mind for you.
• Make sure you’re not missing out on important tax breaks – before tax-year end.
• Organise your paperwork, download the HMRC app and make an appointment with an adviser – our top tips to getting 2023 off to a tax-smart start.

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Many of us will have a money-related goal among our New Year’s Resolutions. It’s a perfect time of year to break old money habits and make some new ones. “Getting into good tax and financial habits help make your life so much easier,” says Tony Clark, Senior Propositions Manager at St. James's Place. “The key is to form new habits that make your good intentions stick, so they become second nature, and you don’t even realise you’re doing them.”

Good money management habits make us feel more confident and in control of our finances, as well as keeping us on track to achieve our long-term goals They’re at the heart of personal financial wellbeing.

These are our top five tax-smart habits to get into before the end of the tax year:

Make the most of your allowances

Making the best use of your tax allowances helps to make your money go further. Many of us have ISAs, but there are other possibilities that are sometimes overlooked and left unused.

“Make sure you’re not missing out on the allowances that you can benefit from,” says Clark. “Are you using what you’re entitled to, such as ‘carry forward’ on your annual pensions allowances, or your gifting allowance?”

Did you know for example that, in addition to the £40,000 tax relief allowance on pension payments, HMRC will let you carry forward any unused allowances from the three previous tax years – starting with the earliest tax year first.

Or that you can make up to £3,000 worth of gifts in a single tax year that won’t be counted as part of your estate when it’s time to pay Inheritance Tax?

Do talk to us to find out what’s available and what you could benefit from. You don’t want to miss out on a real tax-saving opportunity.

Breaking the ‘last-minute’ tax habit

The 2022/23 tax year may not end until 5 April, but there’s no need to put yourself under unnecessary deadline stress by leaving everything until one minute to midnight on the 4th.

There are sound, practical reasons for sorting your taxes and year-end finances in good time too. It can take much longer for providers to process transactions if there’s a bottleneck at tax-year end.

Check whether you need to top up your ISA or review your mix of Cash and Stocks and Shares. Or put cash into extra pension contributions. We're always happy to talk through your options and adjust your financial plan if you want to.

It’s worth carving out time now. You’ll feel more organised, and you don’t know what else might be on your to-do list by April!

Get your papers in order

Many more of us are self-employed, which means many more of us are filing self-assessment tax returns. The end of January deadline for online self-assessment returns can spark a last minute panic search for records, receipts, missing statements, and other information that you need to make sure your return is accurate and complete.

“It’s easy to miss the deadline and incur penalties that you might otherwise have avoided. If you’re self-employed, your personal finances will be closely linked to your business, so you’ve got more work to do,” says Clark. “It’s especially important for sole traders to be organised and get advice.”

If you get into the habit of keeping your paperwork up to date, you’ll make life much easier come self-assessment time. Plus, you’ll give your accountant less chasing to do, which means less time to charge you for.

Use the HMRC app to organise your paperwork

Simply knowing where all your documentation is, the correct tax codes and other official information, saves you time and last-minute searching for information at tax-year end. Downloading the HMRC app is a good place to start, says Clark. “There’s plenty of information on there that people might not be aware of, so it’s a very useful resource. You can use it to keep track of your records and stay on top of things such as your tax code.”

Controlling the paperwork means you can control your money, rather than letting it control you.

Speak to a financial adviser on a regular basis

If you’re not already taking financial advice, this is perhaps the best habit to get into. Financial advice helps you stay on track for your long-term goals, and gives reassurance as well as practical, clear advice in more challenging economic times like the present.  Financial advice is the step that will drive other good financial habits.

“A regular check-in with your adviser will give you the impetus and momentum to keep on top of everything,” says Clark. “They help guide and support your decisions, remind you of your options, and ask the questions you need to think about.”

Make 2023 the year you set some good money habits that will become second nature, increase your financial wellbeing, and stand you in good stead in the future.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

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