How consumers can avoid being a last-minute tax dasher: Sarah Coles

For some people, leaving things late is a sensible option, particularly anyone with a lumpy income. They may not know until the last gasp how much money they have to spare for investments. They may also not know whether they need to use pension contributions to help bring down their taxable income below a specific threshold.

For most people, however, it comes down to human nature. The fundamental problem is known as ‘present bias’, which is essentially why we put anything off: we value our emotions and feelings in this precise second more than we do our emotions and feelings in a few days’ time. We focus on the fact we’d like to spend this minute watching a film or walking the dog, rather than paying into a pension or an ISA. And we leave the slightly duller job for our future selves. It’s why it doesn’t always help to think about how good it will feel to get it done, because that feeling belongs in the future, so we don’t really care.

In fact, we’ll only really get down to hitting a deadline when the worry about not getting it done starts to damage our feelings and emotions right now. We’ll only get cracking when the anxiety reaches a level that means we can’t enjoy the film and we can’t relax on the dog walk, because we’re worried we’ll miss the deadline.

Some people are predisposed to feel this more acutely. One model of personalities lists five traits – extraversion, agreeableness, openness, conscientiousness, and neuroticism. The higher you score on the last two traits, the more likely you are to respond to worries about missing the deadline, and get the job done early. If you score low on these fronts, you’re not going to let the worry get to you until much later in the process.

Your personality type is partly a product of your background and upbringing – parents who role modelled relaxed last-minute lifestyles could help persuade you it’s not the end of the world to top up your ISA at 11.55pm on the 5 April. Those who issued dire warnings of the consequences of being late, and were quite happy to leave without you, are likely to have instilled more conscientiousness.

However, as someone who feels like they have conducted an 18-year experiment into nature versus nurture, I can testify to the power of nature. I’ve treated my children exactly the same way, and yet one of them is currently arranging her plans for summer 2025, and the other one is waking me up to help him register on websites five minutes before the deadline.

However hopeless it seems, if you can’t seem to break away from being a last-minute dasher, there are some techniques that can help. You can make the task as easy as possible. If you haven’t opened an ISA this year because you don’t know how to invest the money, for example, you can break it down into steps. First open the account and beat the deadline, then separately make an investment decision.

If the second step feels too hard, you can opt for what my dad used to call the gin and tonic solution. If you’re ever offered an alcoholic drink, he said, decide immediately that you want a gin and tonic, and then consider whether there’s anything else you would prefer. It makes it much easier to choose, and gives you a fallback that will be fine – assuming you like gin and tonic. In investment terms, your fallback could be something like a ready-made investment solution.

Some people like to give themselves a specific time and date in order to get themselves moving. It takes the need for motivation out of the equation. When that day comes, you know what you have to do – regardless of whether you fancy it or not. This isn’t foolproof, because some people will just keep putting it off, but it’s definitely worth a try – just don’t make that date the 5 April.

And if you’re the kind of person who only really does something they have to in order to get something they want, then arrange some kind of immediate reward you can have when you’ve sorted your ISA. So, for example, if you have to sort your ISA before you’re allowed to binge-watch a TV show everyone is talking about, it can help force your hand.

Of course, there’s an alternative for those who can’t fool themselves, and it’s one I eventually realised is the only way to make myself sort investments and pensions well in advance. I automate it. I have monthly contributions going into my pension and ISA, so I can give into my ‘present bias’ as much as I want, and watch a film or walk the dog, while simultaneously feeling smug that I won’t be rushing around in the dying seconds of the tax year. Of course, I had to be disciplined enough to set this up – but we probably all have at least one burst of organised activity in us somewhere. Surely even my son.

Current account trap

We’re throwing away more than £400 a year because we feel more secure sitting on a cushion of cash in our current accounts. The average household has £8,311 languishing there, and while we need some of it for essential spending, there’s every chance we’re keeping way too much to hand. If we moved that to an easy access account without restrictions, or a cash ISA, we could make 5.11%, which over a year could leave us £435 better off.

One in five savers keep at least some of their savings in a current account. When we choose where to save, after the rate and the security of the bank, the next consideration is how easy it is to get access to our money – chosen by one in eight people. However, we don’t need to lock it away in order to make our money work harder. With the most competitive easy access accounts and cash ISAs offering more than 5%, we can have a rewarding account and yet still get our hands on our cash very easily.