This Sunday marks Tax Freedom Day, which means that after 150 days of 2015, UK taxpayers will effectively be putting their wages into their own pocket, rather than paying it to the Treasury.
It has been calculated by the Adam Smith Institute that on Tax Freedom Day the average Briton will have earned enough money to cover all the National Insurance, VAT, fuel duty, and other taxes that they owe in 2015. This year’s Tax Freedom Day falls one day later than it did in 2014.
However research shows as a nation we’re still set to waste as much as £4.9 billion by not properly planning for our tax allowances.
Take action to reduce your tax bill
Karen Barrett, chief executive of unbiased.co.uk comments: ‘‘There are simple steps you can take to ensure you're being as tax efficient as possible and bring forward your own personal Tax Freedom Day. Many UK taxpayers are saving money into taxed saving and investment products, when they could be making the most of substantial reliefs, allowances and better rates. There are clearly some tax payments that cannot be changed, but people should make sure they are not unnecessarily wasting their earnings, and use this day as a reminder to take action on their taxes."
A financial adviser or accountant will be able to inform you of all your options, and help guide you towards the products and allowances that are part of efficient and responsible tax planning. For a free and confidential search for a financial adviser or accountant, click here.
The nation’s tax wastage 2015 – the key statistics
- 4.2 million UK adults currently in employment are not saving into a pension and not making use of their pension tax allowance from the government resulting in £2.9 billion in tax relief set to remain unused this year
- 55 million UK bank account holders are set to waste a combined total of more than £1.3 billion by not moving their money into tax-efficient individual savings accounts (ISAs)
- £550 million wasted in inheritance tax (IHT) by individuals not placing life protection policies ‘under trust’. Not placing it under trust could reduce a £100,000 life insurance payout by as much as £40,000 if an individual’s total estate is worth more than £325,000
- £1586 million in unnecessary capital gains tax (CGT) payments this tax year. One of the main areas of CGT waste occurs from people not using ISAs to shelter investments from any tax liabilities. Each UK taxpayer has an annual CGT free allowance, which for the current tax year stands at £11,000. Any gain above the allowance is charged at 18% for lower and 28% for higher-rate taxpayers.