At a glance
- Getting into good money habits gives you greater confidence, control and financial wellbeing.
- Start by making sure you’re not missing out on important tax breaks – before tax year-end.
- Get 2024 off to a tax-smart start: organise your paperwork, download the HMRC app and make an appointment with an adviser.
Get 2024 off to a tax-smart start
The start of a new year is 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, to the point where you don’t even notice you’re doing them.”
Good money management habits are really important right now, with prices and interest rates still high. Good money habits help us plan our long-term goals as well as our short-term family finances. And if we feel in control of our money and our budget, we feel more financially confident overall. 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, 5 April:
Make the most of your allowances
Do you know how many tax allowances you’re entitled to – and are you sure you’ve used them? Many of us remember to top up our ISAs as much as possible before tax year-end, but there are ways to save tax that are sometimes overlooked and left unused.
“Make sure you’re not missing out on the allowances that you can benefit from,” says Tony. “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 £60,000 tax relief allowance (or 100% of your earnings, whichever is lowest) 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?
Making the best use of your tax allowances helps to make your money go further. 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 2023/24 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 last minute rush 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. Don’t feel guilty if you can’t put away that much this year either – it’s keeping the regular saving habit going that’s important in the long run. 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, which lowers your stress levels and blood pressure. Besides, you don’t know what else might be on your to-do list by April.
Get your paperwork 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 especially important for sole traders to be organised and get advice,” says Tony. “It’s easy to miss the deadline and incur penalties that you might otherwise avoid. If you’re self-employed, your personal finances will be closely linked to your business, so you’ve got more work to do.” We offer a dedicated Business Advisory Service tailored to support for small business owners.
If you get into the habit of keeping your paperwork up to date, you’ll make life a lot easier come self-assessment time. Plus, you’ll give your accountant less chasing to do, which means a lower fee.
Using the HMRC self-assessment app keeps you organised
Simply knowing your 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 Tony: “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.” It will take the stress out of the deadline.
How a financial adviser can help
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, it gives you clear, practical advice if you hit a financial downturn or need advice managing your family finances short-term. It’s the step that drives other good financial habits, and ultimately your financial wellbeing.
“A regular check-in with your adviser will give you the impetus and momentum to keep on top of everything,” says Tony. “They help guide and support your decisions, remind you of your options, and ask the questions you need to think about.”
If you have a family, setting your own good money habits sends a clear signal to your children that managing your money needn’t be stressful, or scary. Make 2024 the year of the good money habit.
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.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
SJP Approved 06/11/2023