As we enter a new year, many of us have set financial goals as part of our resolutions. The start of a new year is the perfect time to break old money habits and start forming new ones. Building good tax and financial habits can not only help you feel more confident and in control of your money, but it can also set you up for long-term success.
In this article, we’ll share five tax-smart habits that you can adopt to help you make the most of your money and achieve your financial goals in 2023.

Know Your Allowances

Understanding your tax allowances can help you maximise your money and take advantage of any tax-saving opportunities available to you. While most of us are familiar with ISAs, there are other allowances that are often overlooked and left unused.

For example, did you know that you can carry forward any unused pension allowances from the three previous tax years? Or that you can gift up to £3,000 in a single tax year without incurring Inheritance Tax?

Talking to a financial advisor can help you identify which allowances you’re entitled to and which ones could benefit you the most. Don’t miss out on potential tax savings by failing to use the allowances available to you.

Avoid Last-Minute Panic

While the 2022/23 tax year may not end until April 5th, it’s wise to avoid leaving everything to the last minute. Sorting out your taxes and year-end finances in good time can help you avoid unnecessary stress and potential delays.

For example, it can take longer for providers to process transactions if there’s a bottleneck at tax-year end. Checking whether you need to top up your ISA, reviewing your investment mix, or making extra pension contributions should be done well ahead of the deadline.

By carving out time now to organize your finances, you’ll feel more in control and avoid the risk of missing any important deadlines.

Get your papers in order

If you’re self-employed, filing self-assessment tax returns can be a real headache if you don’t keep your paperwork up to date. Missing the deadline for online self-assessment returns can result in unnecessary penalties and fines.

Make life easier for yourself by getting into the habit of keeping your paperwork organised and up to date. This will not only help you file your tax return on time but also save you money on accounting fees.

Use Technology to Your Advantage

Technology has made it easier than ever to stay on top of your finances. By downloading the HMRC app, you can keep track of your records, stay on top of your tax code, and access other useful information.

Having all your documentation organised in one place can save you time and stress when it comes to filing your tax return. Take advantage of the technology available to you to simplify your financial life and gain more control over your money.

Seek Professional Advice

Even if you feel confident in your financial management skills, it’s always a good idea to seek the advice of a financial professional. A regular check-in with an advisor can help you stay on track for your long-term goals and make informed decisions about your finances.

By incorporating these tax-smart habits into your routine, you can set yourself up for a financially healthy year and beyond. Remember, good habits take time to form, so start small and build from there. With the right mindset and support, you can achieve your financial goals and improve your overall wellbeing.

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