The new tax year is here, bringing a fresh opportunity to make the most of your money and financial well-being. That was the focus of our new tax year Money Masterclass, featuring multi-award winning financial journalist and broadcaster Georgie Frost, Editor-at-large at Times Money Mentor and Host of the This is Money podcast. Brian Byrnes (Head of Personal Finance) sat down with Georgie to discuss their tips for the new tax year and how to maximise the year ahead.
Understand your relationship with money
Before diving into the nuts and bolts of tax year tips, it’s essential to understand the psychological factors that influence our financial habits. Georgie Frost emphasises that “money isn’t just about pounds and pence… it is so emotionally connected.” Many of our financial behaviours are rooted in our childhood experiences and perceptions of money.
“Don’t let perfect be the enemy of good,” Georgie suggests. It’s a common misconception that financial experts have always been great with money. In reality, everyone is susceptible to emotional spending and financial knowledge is something that’s learned over time. Recognising and addressing this is the first step towards building healthier financial habits.
Georgie points out that most of us are better with money than we think. Especially women, who tend to underestimate themselves. “People are better with money than they really give themselves credit for,” she says. It’s about figuring out what “good” means to you when it comes to money – not just about saving every penny. Be your own role model!
Why the new tax year matters
The new tax year can sometimes bring changes to allowances and thresholds, so it’s good to stay on top of it, so you can make the most of it! ISAs are a great way to earn more from your money in a tax-efficient way.
Regardless of whether you’re saving or investing, you get a £20,000 annual allowance – shared across any ISAs that you have – and all your interest earnings and profit gains are completely tax-free. Georgie highlights the “use it or lose it” nature of ISAs – your tax-free ISA allowance doesn’t roll over when the tax year ends.
Pensions also offer significant tax breaks, allowing you to contribute up to £60,000 annually and carry forward unused allowances.
Capital at risk. ISA, pension, and tax rules apply.
Boost your financial confidence
Financial confidence comes from doing and learning. “True confidence is built through experience, and sometimes you can get things wrong,” Georgie explains. The more you get involved with your finances, the more confident you’ll feel.
Brian’s practical tips include dedicating just 30 minutes a week to something money-related, whether it’s listening to a podcast, reading a blog, or researching ISAs. Even small steps can make a big difference!
Saving vs. investing: finding your balance
Brian and Georgie discuss how to get the right balance between saving and investing. Georgie breaks it down like this: “Saving and investing is your time horizon.” If you’re saving for a goal like a holiday or a house, knowing you want to achieve it in the next few years, stick to cash savings accounts. But for long-term goals like retirement, consider investing to make your money work harder.
Making the most of your tax-free ISA allowance
To maximise your tax-free ISA allowances, break them down into manageable weekly or monthly amounts. For example, to max out a Lifetime ISA’s £4,000 limit, you’d need to save just under £77 a week. Aligning your savings and investments with your financial goals is crucial.
Brian emphasises the importance of understanding what your money is for. “Figure out what your money is for,” he states. Once you know your goals, picking the right financial products to achieve them becomes much easier.
Save smarter, not harder
Georgie is a big believer in understanding your potential weaknesses and hacking them. “Know thyself,” she says. Find ways to make saving as easy and painless as possible. Setting up direct debits on payday and automating pension contributions are effective strategies.
Don’t be afraid to invest
Investing can seem daunting, but it’s more accessible than many think. “It’s education… it’s empowerment,” Georgie says. Focusing on the future benefits of investing can make it less intimidating, if you’re on the edge of starting.
Georgie busts some common myths – you don’t need to be rich or a genius to invest. Tools and apps like Moneybox aim to make investing accessible to everyone. You can do it too!
With a Moneybox Stocks & Shares ISA, you can invest in our range of tracker fundsFunds, also called ‘tracker funds’, are financial instruments that have been set up to match or ‘track’ the price of a market index. Investing in a fund lets you get exposure to different financial assets like shares and bonds, without having to buy them directly., our exchange traded funds, and our US stocksStocks, also known as shares or equities, represent units of ownership in a company.. To start, you’ll need to pick one of our Starting Options, and then it’s up to you how much you customise your allocation.
If you do want to customise, just go to Settings > Allocation > Change allocation. But, you don’t have to invest in ETFs or US stocks if you don’t want to – think of them as an optional extra. If you’d rather stick with the allocations we give you in our pre-made portfolios, that’s totally fine.
What our experts would tell their younger selves
Georgie’s advice to her younger self is to “think about flipping the narrative and just take that first step.” Plus, don’t beat yourself up for past mistakes. Financial education is a lifelong learning curve, and it’s never too late to begin!
Key takeaways for the new tax year
- Make the most of tax breaks: Think “use it or lose it” when it comes to your ISA allowance!
- Boost your pension: Get those tax breaks and make the most of any employer contributions.
- Know your allowances: Stay on top of changes to capital gains and dividendsThe amount of profit that a company returns to its shareholders..
- Set your goals: What do you want your money to do for you?
- Get learning: Keep building your financial knowledge – it’s a constant learning curve.
- Start investing: Even small amounts can grow over time.
By using these tips from Georgie Frost and Brian Byrnes, you’ll be all set to tackle the new tax year and build a brighter financial future.
Moneybox and its associated third parties do not offer personal financial advice or make specific recommendations based on your individual circumstances. If needed, seek independent financial advice before making decisions regarding your financial goals.
Capital at risk. All investing should be long term. The value of your investments and pension can go up and down, and you may get back less than you invest.
Tax treatment depends on individual circumstances and may be subject to change in the future.