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125 Million in Child Trust Fund Tax Breaks will go to Waste in 2007 (Consumer)

For immediate release – Wednesday 12^th September 2007

• Only 71% of new parents have opened a CTF account for their children since their introduction in April 2005
• About 125 million will be wasted by parents not taking advantage of the full tax breaks of their children’s Child Trust Funds in 2007
• Unbiased.co.uk urges parents to make the most of the opportunity and take action to reduce their tax!

Figures out today from Unbiased.co.uk, the website promoting the benefits of independent financial advice, show that parents will be wasting 125 million in tax breaks by not making full use of their children’s Child Trust Fund (CTF) allowance.

Unbiased.co.uk research estimates that less than three quarters (71%) of eligible children have had a CTF account opened for them. And on top of that less than half of the CTF accounts opened since 2005 will make use of their full 1,200 funding allowance per year, equating to an overall tax waste of 125 million.

David Elms, Chief Executive of Unbiased.co.uk comments, “The government introduced Child Trust Funds as a way of helping parents plan for their children’s’ futures. However, our research has shown that parents are not making the most of this opportunity. Parents don’t have to pay tax on the interest earned on a CTF account and by not using their full funding allowance each year they may  potentially be gifting the taxman more money than necessary.”

“Since we launched TaxAction fifteen years ago, we have seen a steady increase in the amount of tax we throw away. This year’s report shows we waste 7.9 billion, the highest since the campaign began. People who want to reduce the amount they waste should visit an independent financial adviser who can show you how to become tax savvy with your finances.”

CTF vouchers can be claimed within the first twelve months of a child’s life and can be invested in cash or equities with a range of different risk profiles. An IFA can help you decide which product is right for you. Find one at www.unbiased.co.uk or by calling 0800 085 3250.

For help stamping out your tax waste, please go to www.unbiased.co.uk/taketaxaction for tips on how to save tax, an online tax wastage calculator, and a guide to saving tax. You can also find details of local IFAs on the site or by calling 0800 085 3250.

-ends-

** TaxAction 2007 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of Inland Revenue and a range of other official data sources.

 

Tax doesn’t have to be taxing – Here are 10 basic ways to claw back some of the waste:

IF YOU HAVE ASSETS OVER 300,000: Plan your inheritance - an extra 1.5 billion could go to chosen heirs by planning properly to avoid IHT liabilities. IHT is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.

IF YOU SAVE: Use up your annual ISA allowance - 382 million in tax could be avoided by sheltering investments in ISAs, or moving savings from an ordinary deposit or savings account to an ISA. Also consider a Friendly Society savings account or products from National Savings & Investments as tax-efficient savings options.

IF YOU ARE ELIGIBLE: Claim your tax credits - 2.3 billion of ‘free money’ is up for grabs from HMRC and the DWP, in the form of Pension Credits, Child Tax Credits and Working Family Tax credits.

IF YOU FILL IN A TAX RETURN: Sort out your self-assessment - 463 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. Self-assessment forms received after the deadline incur penalties of 100; further penalties and errors make up the balance of tax wasted in this way.

ALL TAXPAYERS: Maximise your personal tax allowances - 546 million goes begging each year, 322 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further 224 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.

IF YOU SAVE: Top up your pension pot - 739 million could be spared by optimising contributions to personal or company pension schemes, or making Additional Voluntary Contributions.

IF YOUR EMPLOYER OFFERS AN EMPLOYEE SHARE PLAN: Take advantage of it - 171 million is up for grabs for the estimated 600,000 staff currently in Profit Related Pay schemes.

IF YOU HAVE CAPITAL GAINS: Use your allowance efficiently, perhaps by transferring assets between spouses to make the most of both of your CGT allowances - 510 million could be saved in this way.

IF YOU GIVE TO CHARITY: 1 billion more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, Gift Aid or payroll giving.

IF YOUR CHILD OR GRANDCHILD IS ELIGIBLE FOR A CHILD TRUST FUND: Avoid waste byusing up the tax free saving potential - 125 million in tax could be saved every year by saving for children through a child trust fund.

 

For further information please contact:

David Elms	Nicola Hussey/Jonathon Grove
Chief Executive	Lansons Communications
Unbiased.co.uk	020 7566 9718/ 020 7294 3653
020 7833 3131

For expert comment or case studies from over 200 media-friendly IFAs, journalists should call unbiased.co.uk’s Media Services hotline on

020 7294 3682 or search online at www.unbiased.co.uk/media

 

1.      Independent Financial Adviser Promotion

Unbiased.co.uk is the consumer brand of IFA Promotion, the organisation established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents around 9,000 firms of independent financial advisers across the UK, incorporating over 17,000 registered individuals. These individuals hold over 20,000 incremental qualifications which are each individually verified by the awarding body. IFA Promotion welcomes the prominent display of incremental qualifications and further developments into the credentials of independent financial advice. 

IFA Promotion is sponsored by 27 leading financial institutions, and in the past 12 months, over 600,000 consumers and businesses used unbiased.co.uk to find local independent financial advice.

IFA Promotion believes Independent financial advice should be:

• Affordable. The option to take independent financial advice should be available, by right, to all- not just the wealthiest in society.
• Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.
• Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.

  2.      Independent Financial Adviser Promotion’s sponsors

  Aberdeen Asset Management	Lincoln Financial Group
  Abbey	National Savings & Investments
  AEGON Scottish Equitable Plc	New Star Investment Funds
  Alliance Trust	Norwich Union Life
  AXA Life	Prudential
  Bright Grey	Scottish Life
  BUPA Health Services	Scottish Life International
  Canada Life Ltd	Scottish Widows Plc
  The Children’s Mutual	Skandia UK Group
  Clerical Medical Investment	Standard Life Assurance Company
  Defaqto	Tomorrow
  Friends Provident	Unum
  Invesco Perpetual	Zurich Intermediary Group
  Legal & General

   

  Registered Office: IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606